Tips on how to Rebuild Your Credit Rating After Bankruptcy?
Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so what now? You’ve undoubtedly taken the right steps to address your financial problems by declaring bankruptcy, and all your debts are well behind you now. However, there’s still plenty of work involved to get your finances back on the right track. The major issue that discharged bankrupts encounter is their ability to borrow money, and the main reason for this is their poor credit rating.
For the previous three years, you’ve had no debts to pay back so your credit history has nothing to show other than a bankruptcy mark against your name. There’s been no movement on your credit report, so a blank page will make lending institutions reluctant in lending money to you solely because they can’t analyse your repayment behaviours. Repairing your credit history is the best way to get your finances back on course, and make your recovery process as smooth as possible.
The best ways to rebuild your credit report after discharge?
Due to the fact that loan providers haven’t been able to assess your financial management skills for the last 3 years, you will want to begin displaying healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Acquiring regular and ongoing employment is a great way to increase your financial security and show banks and financial institutions that you have a regular stream of income. Regular employment will enable you to increase your savings and bolster 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 with time will illustrate to lending institutions that you are financially responsible and are capable of making loan repayments. By putting money into a dedicated savings account every month, even a small amount, will improve your credit history.
3. Limit your credit applications
Every time you request a line of credit, it is registered on your credit report, so excessive credit applications can negatively impact your credit history. After being discharged, it’s vital that you are realistic and mindful 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 always remember that secured loans and options with a guarantor or joint accounts will increase the probability of approval.
4. Consider a term deposit
If you’ve had the opportunity to save money throughout your bankruptcy period, consider investing some of it into a term deposit account. Not only will you accrue interest and enhance your overall financial position, it will likewise show financial institutions that you are financially responsible. As a result, the likelihood of obtaining 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 evidently improve your credit report and increase the confidence that loan providers have in your financial management skills.
6. Don’t hesitate to talk to financial institutions
If you want to apply for a line of credit after your bankruptcy period, or find out what types of options are available to you, don’t be reluctant to speak with banks or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and provide recommendations on what options would work best for your personal situation.
Be careful with credit repair agencies
There are a lot of credit repair companies that will make all kinds of promises to improve your credit record. Whilst many of them are useful 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 companies due to the fact that they “may not always be able to do what they claim they can”.
If you require any advice in repairing your credit report, or have any inquiries regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Get in touch with Bankruptcy Experts Bunbury on 1300 795 575, or alternatively you can visit our website for further information: www.bankruptcyexpertsbunbury.com.au