The best 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 unquestionably taken the right measures to deal with your financial challenges by filing for bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still plenty of work required to get your finances back on track. The leading issue that discharged bankrupts face is their capability to borrow money, and the main reason for this is their poor credit rating.
For the previous 3 years, you’ve had no debts to pay off 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 lenders reluctant in lending money to you solely because they can’t ascertain your repayment habits. Rebuilding your credit history is the best way to get your finances back on course, and make your recovery process as smooth as possible.
How to rebuild your credit report after discharge?
Considering that loan providers haven’t been able to analyse your financial management skills for the last three years, you will want to begin exhibiting healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Achieving stable and ongoing employment is a terrific way to boost your financial security and show lending institutions that you have a regular income source. Steady employment will enable you to increase your savings and bolster your overall financial condition, leading to a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance gradually will demonstrate to lenders that you are financially responsible and are capable of making loan repayments. By putting 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 make an application for a line of credit, it is documented on your credit report, so excessive credit applications can adversely affect your credit rating. After being discharged, it’s critical that you are sensible and vigilant about the types of credit you apply for to increase your chances 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 likelihood of approval.
4. Consider a term deposit
If you’ve had the capacity to save money during your bankruptcy period, consider investing part of it into a term deposit account. Not only will you accumulate interest and strengthen your overall financial situation, it will also show lending institutions that you are financially responsible. 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 most certainly improve your credit history and increase the confidence that lenders have in your financial management capabilities.
6. Don’t hesitate to talk with loan providers
If you wish to request a line of credit after your bankruptcy period, or uncover what types of options are available to you, don’t be reluctant to talk with lenders 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 individual circumstances.
Beware of credit repair companies
There are numerous credit repair agencies that will make all sorts of promises to improve your credit report. Whilst some of them are helpful in disbuting 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 due to the fact that 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. Get in touch with Bankruptcy Experts Canberra on 1300 795 575, or alternatively you can visit our website for additional information: Bankruptcy Canberra