|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 unquestionably taken the appropriate steps to deal with your financial dilemmas by declaring bankruptcy, and all your debts are well behind you now. However, there’s still a lot of work involved to get your finances back on the right track. The major issue that discharged bankrupts experience is their ability 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 reluctant in lending money to you purely because they can’t analyse your repayment behaviours. Repairing your credit history is the best way to get your finances back in order, and make your recovery process as seamless as possible.
Ways to repair your credit report after discharge?
Due to the fact that lending institutions haven’t been able to analyse your financial management skills for the last three years, you will need to start demonstrating healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Securing reliable and ongoing employment is a fantastic way to enhance your financial security and display to loan providers that you have a regular income stream. Reliable employment will enable you to increase your savings and improve your overall financial condition, resulting in a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance in time will display to loan providers that you are financially sensible and are capable of making loan repayments. By putting money into a dedicated savings account each month, even a small amount, will improve your credit rating.
3. Limit your credit applications
Each time you apply for a line of credit, it is recorded on your credit history, so too many credit applications can negatively affect your credit rating. After being discharged, it’s integral that you are realistic and vigilant about the types of credit you apply for to increase the likelihood of approval. It’s best to apply for just one line of credit at once, and remember 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 had the chance to save money during your bankruptcy period, consider putting part of it into a term deposit account. Not only will you accumulate interest and boost your overall financial circumstances, it will also show financial institutions 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. Regardless if it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will certainly improve your credit rating and increase the confidence that loan providers have in your financial management capabilities.
6. Don’t be afraid to talk to financial institutions
If you want to request a line of credit after your bankruptcy period, or find out what types of options are available to you, don’t hesitate to speak with lenders or other financial institutions to review 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 circumstances.
Beware of credit repair firms
There are a number of credit repair agencies that will make all kinds of promises to improve your credit report. Even though some of them are effective in challenging any incorrect listings on your credit record, 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 companies since they “may not always be able to do what they claim they can”.
If you’re in need of any help in repairing your credit history, or have any questions with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Talk with Bankruptcy Joondalup on 1300 818 575, or alternatively you can visit our website for more information: http://www.bankruptcy-joondalup.com.au/