|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so what now? You’ve clearly taken the appropriate measures to deal with your financial troubles by filing for bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still a considerable amount of work required to get your finances back in order. The leading issue that discharged bankrupts encounter is their capability to borrow money, and the reason for this is their bad credit rating.
For the previous three years, you’ve had no debts to pay off so your credit history has nothing to show other than a bankruptcy mark against your name. There’s been no activity on your credit report, so a blank page will make lending institutions hesitant in lending money to you purely because they can’t inspect your repayment habits. Rebuilding your credit history is the best way to get your finances back on the right track, and make your recovery process as smooth as possible.
How to rebuild your credit report after discharge?
Due to the fact that lending institutions haven’t been able to inspect your financial management skills for the previous 3 years, you will want to begin showing healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Obtaining consistent and ongoing employment is an effective way to improve your financial security and display to lending institutions that you have a regular income stream. Steady employment will enable you to increase your savings and improve 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 show lending institutions that you are financially reliable and are capable of making loan repayments. By transferring money into a specialised savings account each month, even a small amount, will improve your credit history.
3. Limit your credit applications
Whenever you request a line of credit, it is registered on your credit report, so too many credit applications can adversely impact your credit history. After being discharged, it’s important that you are realistic and cautious about the types of credit you apply for to increase your chances of approval. It’s best to apply for just one line of credit at a time, and remember that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
4. Contemplate a term deposit
If you’ve had the capacity to save money throughout your bankruptcy period, contemplate investing part of it into a term deposit account. Not only will you accumulate interest and improve your overall financial circumstances, it will likewise show lenders that you are financially sensible. Therefore, the likelihood of securing 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. Regardless of whether it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will definitely improve your credit rating and increase the confidence that lending institutions have in your financial management abilities.
6. Don’t be afraid to talk to financial institutions
If you intend to apply for a line of credit after your bankruptcy period, or uncover what types of options are available to you, don’t hesitate to speak to banks or other financial institutions to discuss your circumstances. 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 careful with credit repair agencies
There are plenty of credit repair agencies that will make all sorts of promises to improve your credit record. Although some of them are helpful in challenging any incorrect listings on your credit history, they may not be able to do anything else to improve your credit record. The Government’s MoneySmart website (https://www.moneysmart.gov.au/) advises discharged bankrupts to be “very careful” of these agencies because they “may not always be able to do what they claim they can”.
If you’re in need of any advice in rebuilding your credit history, or have any inquiries with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Phone Bankruptcy Experts Mount Isa on 1300 795 575, or alternatively you can visit our website for further information: Bankruptcy Mount Isa