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January 12, 2018 Comments Closed

Tips on how to Rebuild Your Credit Rating After Bankruptcy?

Posted by:Bankruptcy Specialist onJanuary 12, 2018

Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so what now? You’ve clearly taken the appropriate actions to deal with your financial challenges by filing for bankruptcy, and all your debts are well behind you now. Despite this, there’s still a considerable amount of work required to get your finances back on track. The biggest issue that discharged bankrupts confront is their capability 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 off so your credit history has nothing to show with the exception of a bankruptcy mark against your name. There’s been no movement on your credit report, so an empty page will make banks and lenders reluctant in lending money to you only because they can’t ascertain your repayment behaviours. 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.

The best ways to rebuild your credit report after discharge?
Due to the fact that financial institutions haven’t been able to review your financial management skills for the last 3 years, you will want to begin exhibiting healthy financial habits. Here’s a list of ways in which you can do this

1. Reliable employment
Acquiring regular and ongoing employment is a great way to improve your financial security and display to lenders that you have a regular income source. Steady employment will allow you to increase your savings and enhance your overall financial condition, resulting in 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 display to lending institutions that you are financially responsible and are capable of making loan repayments. By transferring money into a specialised savings account each month, even a small amount, will improve your credit rating.

3. Limit your credit applications
Each time you apply for a line of credit, it is recorded on your credit history, so lots of credit applications can negatively affect your credit rating. After being discharged, it’s crucial that you are realistic and cautious about the types of credit you apply for to increase your chances of approval. It’s best to make an application for only one line of credit at a time, and always 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 the course of your bankruptcy period, think about investing part of it into a term deposit account. Not only will you accumulate interest and improve your overall financial situation, it will likewise show financial institutions that you are financially responsible. Consequently, 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 kind of repayment on time. Regardless of whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will certainly improve your credit history and increase the confidence that lending institutions have in your financial management skills.

6. Don’t hesitate to talk with loan providers
If you want to make an application 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 talk to lenders or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and provide advice on what options would work best for your individual circumstances.

Be careful with credit repair agencies
There are numerous credit repair agencies that will make all sorts of promises to improve your credit report. Whilst many of them are useful in disbuting 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 because 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 questions with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Get in contact with Bankruptcy Melbourne on 1300 818 575, or alternatively you can visit our website for additional information: http://www.bankruptcy-melbourne.com.au/

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