Congratulations! You’ve successfully served your three year period of bankruptcy and have been discharged, so what now? You’ve certainly taken the appropriate measures to resolve your financial dilemmas by filing for bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still a good deal of work involved to get your finances back in order. The biggest issue that discharged bankrupts face is their opportunity to borrow money, and the main reason for this is their bad credit rating.
For the previous three years, you’ve had no debts to repay 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 banks and lenders hesitant in lending money to you simply because they can’t assess your repayment habits. Rebuilding your credit rating is the best way to get your finances back in order, and make your recovery process as seamless as possible.
How you can repair your credit report after discharge?
Given that financial institutions haven’t been able to examine your financial management skills for the past three years, you will want to begin showing healthy financial habits. Here’s a list of ways in which you can do this
1. Reliable employment
Achieving reliable and ongoing employment is an effective way to boost your financial security and show lenders that you have a regular source of income. Regular employment will enable you to increase your savings and enhance your overall financial situation, resulting in a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance gradually will illustrate to loan providers 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
Each time you make an application for a line of credit, it is recorded on your credit history, so too many credit applications can adversely affect your credit rating. After being discharged, it’s integral that you are practical and vigilant about the kinds of credit you apply for to increase your chances of approval. It’s best to make an application 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 likelihood of approval.
4. Contemplate a term deposit
If you’ve had the capacity to save money throughout your bankruptcy period, contemplate investing some of it into a term deposit account. Not only will you accrue interest and improve your overall financial position, it will additionally show loan providers that you are financially reliable. Subsequently, 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 type 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 most definitely improve your credit rating and increase the confidence that lenders 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 be reluctant to talk to banks or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and offer recommendations on what options would work best for your personal circumstances.
Be careful with credit repair firms
There are a lot of credit repair companies that will make all sorts of promises to improve your credit record. Even though many of them are helpful 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 need any assistance in rebuilding your credit report, or have any questions regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Call Bankruptcy Experts Wangaratta on 1300 795 575, or alternatively you can visit our website for additional information: www.bankruptcyexpertswangaratta.com.au