Effective ways to Rebuild Your Credit Rating After Bankruptcy?
Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so now what? You’ve definitely taken the most suitable measures to deal with your financial issues by filing for bankruptcy, and all your debts are well behind you now. Despite this, there’s still a lot of work required to get your finances back in order. The leading issue that discharged bankrupts confront is their capability to borrow money, and the reason for this is their poor credit rating.
For the past 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 next to your name. There’s been no movement on your credit report, so an empty page will make lenders hesitant in lending money to you only because they can’t ascertain your repayment habits. Repairing your credit history is the best way to get your finances back on the right track, and make your recovery process as smooth as possible.
How to rebuild your credit report after discharge?
Since lending institutions haven’t had the ability to check your financial management skills for the past three years, you will want to begin demonstrating healthy financial habits. Here’s a list of ways in which you can do this
1. Regular employment
Acquiring reliable and ongoing employment is an effective way to improve your financial security and display to lending institutions that you have a regular income stream. Stable employment will allow you to increase your savings and enhance 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 display to lending 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 rating.
3. Limit your credit applications
Whenever you make an application for a line of credit, it is documented on your credit history, so excessive credit applications can adversely impact your credit history. After being discharged, it’s very important that you are sensible and vigilant about the kinds of credit you apply for to increase your chances of approval. It’s best to make an application for just one line of credit at a time, 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 had the capacity to save money throughout your bankruptcy period, contemplate putting part of it into a term deposit account. Not only will you accrue interest and boost your overall financial circumstances, it will likewise show lending institutions that you are financially sensible. Consequently, 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. Whether it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will certainly improve your credit report and increase the confidence that financial institutions have in your financial management abilities.
6. Don’t be afraid to speak to loan providers
If you intend to request 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 review your situation. They are in the best position to advise of your eligibility, and offer suggestions on what options would work best for your individual situation.
Be careful with credit repair agencies
There are numerous credit repair companies 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 history, 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 guidance in repairing your credit report, or have any queries concerning your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Reach out to Bankruptcy Experts Geelong on 1300 795 575, or alternatively you can visit our website for further information: www.bankruptcyexpertsgeelong.com.au