|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 unquestionably taken the most suitable steps to resolve your financial challenges by filing for bankruptcy, and all your debts are well behind you now. Having said this, there’s still a considerable amount of work involved to get your finances back in order. The biggest issue that discharged bankrupts encounter is their opportunity to borrow money, and the reason for this is their poor credit rating.
For the last three years, you’ve had no debts to repay so your credit history has nothing to show besides a bankruptcy mark against your name. There’s been no activity on your credit report, so an empty page will make lenders hesitant in lending money to you purely because they can’t inspect your repayment behaviours. Rebuilding your credit rating is the best way to get your finances back on the right track, and make your recovery process as seamless as possible.
The best ways to rebuild your credit report after discharge?
Since financial institutions haven’t had the ability to assess your financial management skills for the last 3 years, you need to start displaying healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Obtaining stable and ongoing employment is an effective way to enhance your financial security and demonstrate to banks and financial institutions that you have a regular stream of income. Reliable employment will allow 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 over time will show lenders that you are financially dependable and are capable of making loan repayments. By transferring money into a specialised savings account every 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 registered on your credit report, so lots of credit applications can negatively affect your credit rating. After being discharged, it’s extremely important that you are pragmatic and cautious about the kinds of credit you apply for to increase the likelihood of approval. It’s best to apply for only one line of credit at a time, and always remember that secured loans and options with a guarantor or joint accounts will increase the chances of approval.
4. Think about a term deposit
If you’ve been able to save money throughout your bankruptcy period, consider investing part of it into a term deposit account. Not only will you accumulate interest and boost your overall financial position, it will likewise show loan providers that you are financially responsible. Subsequently, 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 type of repayment on time. Whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will most definitely improve your credit rating and increase the confidence that lending institutions have in your financial management abilities.
6. Don’t hesitate to talk with lenders
If you wish to make an application 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 situation. They are in the best position to advise of your eligibility, and offer suggestions on what options would work best for your personal circumstances.
Beware of credit repair agencies
There are a number of credit repair companies that will make all kinds of promises to improve your credit record. Although many of them are reliable 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 companies since they “may not always be able to do what they claim they can”.
If you require any expertise 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. Talk with Bankruptcy Alice Springs on 1300 818 575, or alternatively you can visit our website for further information: http://www.bankruptcy-alicesprings.com.au/