|January 12, 2018||0|
Congratulations! You’ve successfully served your three year period of bankruptcy and have been discharged, so now what? You’ve clearly taken the appropriate actions to settle your financial challenges by declaring bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still a lot of work required to get your finances back in order. The most significant issue that discharged bankrupts confront is their ability to borrow money, and the main 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 with the exception of a bankruptcy mark next to your name. There’s been no activity on your credit report, so a blank page will make financial institutions hesitant in lending money to you only because they can’t assess your repayment habits. Repairing your credit rating is the best way to get your finances back in order, and make your recovery process as seamless as possible.
How to repair your credit report after discharge?
Considering that financial institutions haven’t had the ability to review 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. Regular employment
Achieving consistent and ongoing employment is an effective way to increase your financial security and display to lenders that you have a regular income stream. Regular employment will enable you to increase your savings and bolster your overall financial condition, 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 lenders that you are financially sensible and are capable of making loan repayments. By putting money into a specialised savings account every month, even a small amount, will improve your credit history.
3. Limit your credit applications
Whenever you apply 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 crucial that you are practical and careful about the kinds of credit you apply for to increase the likelihood of approval. It’s best to apply for a single line of credit at once, and keep in mind that secured loans and options with a guarantor or joint accounts will increase the chances of approval.
4. Consider a term deposit
If you’ve had the chance to save money throughout your bankruptcy period, think about putting part of it into a term deposit account. Not only will you accrue interest and boost your overall financial situation, it will likewise show loan providers that you are financially dependable. 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 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 with lending institutions
If you wish to request a line of credit after your bankruptcy period, or find out what types of options are available to you, don’t be afraid to talk to banks or other financial institutions to discuss your circumstances. They are in the best position to advise of your eligibility, and offer suggestions on what options would work best for your personal situation.
Be careful with credit repair companies
There are a lot of credit repair agencies that will make all kinds of promises to improve your credit record. While some 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 agencies due to the fact that they “may not always be able to do what they claim they can”.
If you need any help and support in rebuilding your credit report, or have any questions about your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Talk to Fresh Start Solutions Sydney on 1300 818 575, or alternatively you can visit our website for more information: Bankruptcy Sydney