|January 12, 2018||0|
Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so now what? You’ve unquestionably taken the most suitable actions to address your financial troubles by declaring 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 major issue that discharged bankrupts experience is their opportunity to borrow money, and the main reason for this is their bad credit rating.
For the past 3 years, you’ve had no debts to pay off so your credit history has nothing to show besides a bankruptcy mark next to your name. There’s been no activity on your credit report, so an empty page will make lenders hesitant in lending money to you solely because they can’t analyse your repayment habits. Repairing your credit history is the best way to get your finances back on track, and make your recovery process as smooth as possible.
How to rebuild your credit report after discharge?
Given that financial institutions haven’t been able to evaluate your financial management skills for the past 3 years, you have to start illustrating healthy financial habits. Here’s a list of ways in which you can do this
1. Reliable employment
Obtaining consistent and ongoing employment is a fantastic way to boost your financial security and demonstrate to loan providers that you have a regular stream of income. Steady employment will enable you to increase your savings and strengthen 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 lending institutions that you are financially sensible 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
Each time you make an application for a line of credit, it is documented on your credit history, so too many credit applications can adversely affect your credit rating. After being discharged, it’s imperative that you are pragmatic and mindful about the kinds of credit you apply for to increase the likelihood of approval. It’s best to apply for just one line of credit at a time, and bear in mind that secured loans and options with a guarantor or joint accounts will increase the probability of approval.
4. Contemplate a term deposit
If you’ve managed to save money during your bankruptcy period, contemplate putting some of it into a term deposit account. Not only will you accrue interest and strengthen your overall financial circumstances, it will also show lending institutions that you are financially reliable. Subsequently, 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 most certainly improve your credit report and increase the confidence that lenders have in your financial management abilities.
6. Don’t be afraid to speak to lenders
If you intend to make an application for a line of credit after your bankruptcy period, or identify what types of options are available to you, don’t be afraid to talk with banks or other financial institutions to discuss your circumstances. They are in the best position to advise of your eligibility, and give information on what options would work best for your individual situation.
Beware of credit repair agencies
There are a number of credit repair agencies that will make all kinds of promises to improve your credit report. While many of them are reliable in challenging 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 companies since they “may not always be able to do what they claim they can”.
If you need any expertise in rebuilding 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. Speak with Bankruptcy Cairns on 1300 818 575, or alternatively you can visit our website for more information: http://www.bankruptcy-cairns.com.au/