|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 appropriate actions to deal with your financial dilemmas by declaring bankruptcy, and all your debts are well behind you now. Despite this, there’s still plenty of work required to get your finances back on the right track. The most prevalent issue that discharged bankrupts experience is their capability to borrow money, and the main reason for this is their bad credit rating.
For the last three years, you’ve had no debts to pay back 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 reluctant in lending money to you simply because they can’t assess your repayment behaviours. Rebuilding your credit history is the best way to get your finances back on the right track, and make your recovery process as seamless as possible.
How to rebuild your credit report after discharge?
Due to the fact that loan providers haven’t had the ability to evaluate your financial management skills for the previous three years, you will need to start showing healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Securing steady and ongoing employment is an excellent way to boost your financial security and demonstrate to lending institutions that you have a regular source of income. Regular employment will enable you to increase your savings and improve your overall financial circumstances, resulting in a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance over time will demonstrate to lenders 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 request a line of credit, it is recorded on your credit report, so excessive credit applications can negatively impact your credit history. After being discharged, it’s extremely important that you are realistic and cautious about the types of credit you apply for to increase the likelihood of approval. It’s best to request a single 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 had the capacity to save money during the course of your bankruptcy period, think about putting some of it into a term deposit account. Not only will you accumulate interest and enhance your overall financial situation, it will also show financial institutions that you are financially reliable. Subsequently, your chances 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 or not it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will most certainly improve your credit history and increase the confidence that lending institutions have in your financial management skills.
6. Don’t hesitate to talk with loan providers
If you intend to apply for a line of credit after your bankruptcy period, or discover 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 recommendations on what options would work best for your personal situation.
Be careful with credit repair firms
There are numerous credit repair agencies that will make all kinds of promises to improve your credit report. While some of them are helpful in challenging 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 firms since they “may not always be able to do what they claim they can”.
If you require any assistance in repairing your credit report, or have any concerns with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Reach out to Fresh Start Solutions Adelaide on 1300 818 575, or alternatively you can visit our website for additional information: http://freshstartsolutions.com.au/bankruptcy-adelaide