|January 12, 2018||Comments Closed|
Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so now what? You’ve undoubtedly taken the most appropriate actions to deal with your financial challenges by declaring bankruptcy, and all your debts are well behind you now. However, there’s still plenty of work required to get your finances back on the right track. The leading issue that discharged bankrupts experience is their ability to borrow money, and the reason for this is their bad credit rating.
For the previous 3 years, you’ve had no debts to pay back so your credit history has nothing to show with the exception of a bankruptcy mark against your name. There’s been no activity on your credit report, so a blank page will make lenders hesitant in lending money to you purely because they can’t evaluate your repayment habits. Repairing 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.
How to repair your credit report after discharge?
Considering that loan providers haven’t had the ability to check your financial management skills for the past 3 years, you will want to begin displaying healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Achieving consistent and ongoing employment is an excellent way to boost your financial security and demonstrate to lending institutions that you have a regular income source. Reliable 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 as time go on will display to lending institutions that you are financially reliable 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
Every time you make an application for a line of credit, it is marked on your credit report, so excessive credit applications can negatively impact your credit history. After being discharged, it’s important that you are realistic and vigilant about the types 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 during the course of your bankruptcy period, contemplate putting part of it into a term deposit account. Not only will you accumulate interest and improve your overall financial circumstances, it will additionally show lenders that you are financially reliable. Subsequently, your chances 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. Whether or not it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will certainly improve your credit rating and increase the confidence that financial institutions have in your financial management skills.
6. Don’t be afraid to speak to loan providers
If you intend to request a line of credit after your bankruptcy period, or uncover what types of options are available to you, don’t be reluctant to speak to banks or other financial institutions to discuss your situation. They are in the best position to advise of your eligibility, and give advice on what options would work best for your personal situation.
Be mindful of credit repair companies
There are plenty of credit repair agencies that will make all kinds of promises to improve your credit report. While 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 record. The Government’s MoneySmart website (https://www.moneysmart.gov.au/) advises discharged bankrupts to be “very careful” of these firms since they “may not always be able to do what they claim they can”.
If you require any assistance in repairing your credit history, or have any inquiries regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Reach out to Bankruptcy Sydney on 1300 818 575, or alternatively you can visit our website for more information: http://www.bankruptcy-sydney.com.au/