|January 12, 2018||16|
Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so now what? You’ve obviously taken the appropriate steps to resolve your financial issues by declaring bankruptcy, and all your debts are well behind you now. Despite this, there’s still plenty of work involved to get your finances back on the right track. The most challenging issue that discharged bankrupts confront is their opportunity to borrow money, and the reason for this is their bad credit rating.
For the previous 3 years, you’ve had no debts to repay so your credit history has nothing to show except for a bankruptcy mark against your name. There’s been no activity on your credit report, so an empty page will make lending institutions hesitant in lending money to you simply because they can’t inspect your repayment habits. Repairing your credit history is the best way to get your finances back in order, and make your recovery process as smooth as possible.
Ways to repair your credit report after discharge?
Since loan providers haven’t been able to examine your financial management skills for the previous three years, you need to start displaying healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Obtaining steady and ongoing employment is an effective way to improve your financial security and show lenders that you have a regular stream of income. Steady 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 gradually will show financial institutions that you are financially dependable 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
Every time you make an application for a line of credit, it is recorded on your credit history, so too many credit applications can negatively impact your credit history. After being discharged, it’s extremely important that you are sensible and mindful about the kinds of credit you apply for to increase the likelihood of approval. It’s best to request just one line of credit at once, and remember that secured loans and options with a guarantor or joint accounts will increase the probability of approval.
4. Contemplate a term deposit
If you’ve had the opportunity to save money during your bankruptcy period, consider putting part of it into a term deposit account. Not only will you accumulate interest and enhance your overall financial circumstances, it will also show lenders that you are financially sensible. 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 kind of repayment on time. Regardless of whether it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will definitely improve your credit rating and increase the confidence that lending institutions have in your financial management capabilities.
6.Don’t be afraid to talk to loan providers
If you intend to make an application for a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t be afraid to talk with lenders or other financial institutions to discuss your situation. They are in the best position to advise of your eligibility, and offer insight on what options would work best for your personal circumstances.
Be cautious of credit repair firms
There are a number of credit repair companies that will make all sorts of promises to improve your credit record. Although some of them are reliable in challenging any incorrect listings on your credit history, 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 agencies because they “may not always be able to do what they claim they can”.
If you need any assistance in repairing your credit report, or have any concerns relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Contact Fresh Start Solutions on 1300 818 575, or alternatively you can visit our website for additional information: https://freshstartsolutions.com.au