|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so now what? You’ve definitely taken the right actions to deal with your financial difficulties by declaring bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still a lot of work involved to get your finances back on the right track. The greatest issue that discharged bankrupts confront is their capability to borrow money, and the main reason for this is their bad credit rating.
For the previous 3 years, you’ve had no debts to pay back so your credit history has nothing to show except for a bankruptcy mark next to your name. There’s been no activity on your credit report, so a blank page will make banks and lenders reluctant in lending money to you purely because they can’t inspect your repayment behaviours. Repairing your credit rating is the best way to get your finances back in order, and make your recovery process as smooth as possible.
How to rebuild your credit report after discharge?
Given that lending institutions haven’t had the ability to review your financial management skills for the previous 3 years, you have to start displaying healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Attaining reliable and ongoing employment is an effective way to boost your financial security and display to lending institutions that you have a regular stream of income. Stable employment will enable you to increase your savings and bolster your overall financial circumstances, leading to a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance in time will illustrate to financial institutions that you are financially dependable and are capable of making loan repayments. By putting money into a specialised savings account every month, even a small amount, will improve your credit history.
3. Limit your credit applications
Whenever you request a line of credit, it is recorded on your credit history, so lots of credit applications can adversely affect your credit history. After being discharged, it’s imperative that you are practical and vigilant about the kinds of credit you apply for to increase your chances of approval. It’s best to make an application for only one line of credit at once, and keep in mind that secured loans and options with a guarantor or joint accounts will increase the chances of approval.
4. Contemplate a term deposit
If you’ve been able to save money during the course of your bankruptcy period, consider putting some of it into a term deposit account. Not only will you accrue interest and enhance your overall financial situation, it will additionally show lenders that you are financially dependable. Consequently, the likelihood of acquiring a loan will be increased which leads to an improved credit rating.
5. Always make repayments on time
One of the most important things you can do as a discharged bankrupt is to make any kind of repayment on time. Whether or not it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will undoubtedly improve your credit report and increase the confidence that loan providers have in your financial management skills.
6. Don’t be afraid to talk to financial institutions
If you wish to make an application for a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t hesitate to speak with lenders or other financial institutions to discuss your situation. They are in the best position to advise of your eligibility, and offer advice on what options would work best for your individual situation.
Be mindful of credit repair firms
There are loads of credit repair companies that will make all kinds of promises to improve your credit report. Whilst many of them are helpful in disbuting any incorrect listings on your credit history, they may not be able to do anything else to improve your credit report. The Government’s MoneySmart website (https://www.moneysmart.gov.au/) advises discharged bankrupts to be “very careful” of these agencies since they “may not always be able to do what they claim they can”.
If you need any help in rebuilding your credit report, or have any concerns concerning your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Phone Bankruptcy Adelaide on 1300 818 575, or alternatively you can visit our website for further information: http://www.bankruptcy-adelaide.com.au/