Effective ways to Repair 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 unquestionably taken the right measures to address your financial issues by filing for bankruptcy, and all your debts are well behind you now. Having said this, there’s still plenty of work involved to get your finances back on the right track. The greatest issue that discharged bankrupts experience is their ability to borrow money, and the main reason for this is their bad credit rating.
For the past three years, you’ve had no debts to pay back so your credit history has nothing to show besides 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 purely because they can’t inspect your repayment habits. Rebuilding your credit rating is the best way to get your finances back in order, and make your recovery process as seamless as possible.
The best ways to repair your credit report after discharge?
Considering that loan providers haven’t been able to examine your financial management skills for the past 3 years, you need to begin illustrating healthy financial habits. Here’s a list of ways in which you can do this
1. Reliable employment
Achieving regular and ongoing employment is a fantastic way to boost your financial security and display to lenders that you have a regular source of income. Reliable 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 as time go on will show loan providers that you are financially dependable and are capable of making loan repayments. By transferring money into a dedicated savings account each month, even a small amount, will improve your credit rating.
3. Limit your credit applications
Each time you request a line of credit, it is documented on your credit report, so lots of credit applications can adversely affect your credit history. After being discharged, it’s critical that you are realistic and vigilant about the types of credit you apply for to increase the likelihood of approval. It’s best to request only one line of credit at once, and 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 been able to save money during the course of your bankruptcy period, contemplate putting part of it into a term deposit account. Not only will you accumulate interest and boost your overall financial circumstances, it will additionally show financial institutions that you are financially reliable. As a result, your chances of securing 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 evidently improve your credit report and increase the confidence that lenders have in your financial management abilities.
6. Don’t hesitate to talk to financial institutions
If you want to request a line of credit after your bankruptcy period, or explore what types of options are available to you, don’t hesitate to speak with banks or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and offer recommendations on what options would work best for your individual situation.
Be cautious of credit repair companies
There are a number of credit repair agencies that will make all kinds of promises to improve your credit report. Although many 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 report. The Government’s MoneySmart website (https://www.moneysmart.gov.au/) advises discharged bankrupts to be “very careful” of these companies since they “may not always be able to do what they claim they can”.
If you’re in need of any expertise in rebuilding your credit history, or have any queries relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Speak with Bankruptcy Experts Joondalup on 1300 795 575, or alternatively you can visit our website for more information: www.bankruptcyexpertsjoondalup.com.au