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January 12, 20180

Tips on how to Rebuild Your Credit Rating After Bankruptcy?

Posted by:Bankruptcy Specialist onJanuary 12, 2018

Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so what now? You’ve undoubtedly taken the most appropriate actions to settle your financial problems by filing for bankruptcy, and all your debts are well behind you now. However, there’s still a considerable amount of work required to get your finances back in order. The most prevalent issue that discharged bankrupts experience is their capability to borrow money, and the reason for this is their bad credit rating.

For the previous 3 years, you’ve had no debts to repay so your credit history has nothing to show other than a bankruptcy mark next to your name. There’s been no activity on your credit report, so an empty page will make lending institutions hesitant in lending money to you purely because they can’t ascertain your repayment habits. Repairing your credit history is the best way to get your finances back on track, and make your recovery process as smooth as possible.

The best ways to rebuild your credit report after discharge?
Since loan providers haven’t been able to inspect your financial management skills for the past 3 years, you need to start exhibiting healthy financial habits. Here’s a list of ways in which you can do this

1. Regular employment
Attaining consistent and ongoing employment is a terrific way to boost your financial security and show banks and financial institutions that you have a regular income source. Steady employment will allow you to increase your savings and improve your overall financial situation, resulting in a better credit rating.

2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance gradually will illustrate to financial institutions that you are financially dependable 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
Whenever you apply for a line of credit, it is registered on your credit report, so lots of credit applications can negatively impact your credit history. After being discharged, it’s vital that you are practical and mindful about the types of credit you apply for to increase the likelihood of approval. It’s best to apply for just one line of credit at a time, and keep in mind that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.

4. Contemplate a term deposit
If you’ve had the capacity to save money during your bankruptcy period, contemplate putting part of it into a term deposit account. Not only will you accumulate interest and strengthen your overall financial circumstances, it will additionally show financial institutions that you are financially reliable. Consequently, 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. Regardless of whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will definitely improve your credit report and increase the confidence that lending institutions have in your financial management abilities.

6. Don’t be afraid to speak with loan providers
If you wish to make an application for 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 provide guidance on what options would work best for your individual circumstances.

Be careful with credit repair agencies
There are loads of credit repair firms that will make all sorts of promises to improve your credit report. Although many of them are reliable 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 because they “may not always be able to do what they claim they can”.

If you require any assistance in repairing your credit history, or have any inquiries relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Speak to Bankruptcy Geelong on 1300 818 575, or alternatively you can visit our website for more information: http://www.bankruptcy-geelong.com.au/

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