|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so what now? You’ve undoubtedly taken the right measures to deal with your financial dilemmas by filing for bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still a lot of work involved to get your finances back on track. The most prevalent issue that discharged bankrupts experience is their opportunity to borrow money, and the reason for this is their poor credit rating.
For the last 3 years, you’ve had no debts to pay off so your credit history has nothing to show except for a bankruptcy mark next to your name. There’s been no movement on your credit report, so a blank page will make banks and lenders hesitant in lending money to you simply because they can’t analyse your repayment behaviours. Rebuilding your credit rating is the best way to get your finances back on track, and make your recovery process as seamless as possible.
Ways to repair your credit report after discharge?
Considering that financial institutions haven’t been able to evaluate your financial management skills for the previous three years, you will want to start illustrating healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Achieving reliable and ongoing employment is a fantastic way to increase your financial security and display to loan providers that you have a regular income source. Regular employment will allow you to increase your savings and enhance your overall financial situation, leading to a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance gradually will demonstrate to financial institutions that you are financially responsible 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
Every time you apply for a line of credit, it is registered on your credit report, so too many credit applications can adversely affect your credit history. After being discharged, it’s imperative that you are pragmatic and mindful about the kinds of credit you apply for to increase your chances of approval. It’s best to make an application for a single line of credit at once, and bear in mind that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
4. Consider a term deposit
If you’ve managed to save money throughout your bankruptcy period, contemplate investing part of it into a term deposit account. Not only will you accrue interest and enhance your overall financial situation, it will likewise show loan providers that you are financially dependable. Therefore, the likelihood of obtaining 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 financial institutions have in your financial management skills.
6. Don’t be afraid to speak to lenders
If you wish to request a line of credit after your bankruptcy period, or explore what types of options are available to you, don’t hesitate to talk to lenders or other financial institutions to discuss your situation. They are in the best position to advise of your eligibility, and give guidance on what options would work best for your personal circumstances.
Be cautious of credit repair agencies
There are plenty of credit repair firms that will make all kinds of promises to improve your credit record. Whilst some of them are useful in disbuting any incorrect listings on your credit record, 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 firms due to the fact that they “may not always be able to do what they claim they can”.
If you’re in need of any assistance in repairing your credit report, or have any questions about your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Call Bankruptcy Perth on 1300 818 575, or alternatively you can visit our website for more information: https://www.bankruptcy-perth.com.au/