Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so now what? You’ve undoubtedly taken the right actions to resolve your financial difficulties 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 most challenging issue that discharged bankrupts experience is their opportunity to borrow money, and the reason for this is their poor credit rating.
For the last 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 against your name. There’s been no movement on your credit report, so a blank page will make banks and lenders reluctant in lending money to you simply because they can’t assess your repayment behaviours. Rebuilding your credit rating is the best way to get your finances back on track, and make your recovery process as seamless as possible.
How to repair your credit report after discharge?
Due to the fact that lenders haven’t had the ability to check your financial management skills for the previous three years, you will need to start presenting healthy financial habits. Here’s a list of ways in which you can do this
- Stable employment
Acquiring regular and ongoing employment is a terrific way to enhance your financial security and demonstrate to lending institutions that you have a regular stream of income. Reliable employment will allow you to increase your savings and improve your overall financial condition, resulting in a better credit rating.
- Increase your savings balance
Your savings account is an asset, so increasing your savings balance in time will illustrate to loan providers 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.
- Limit your credit applications
Each time you request a line of credit, it is marked on your credit report, so too many credit applications can negatively impact your credit rating. After being discharged, it’s extremely important that you are pragmatic and careful about the kinds of credit you apply for to increase the likelihood of approval. It’s best to make an application for only one line of credit at a time, and bear in mind that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
- Consider a term deposit
If you’ve managed to save money during your bankruptcy period, think about putting some of it into a term deposit account. Not only will you accrue interest and boost your overall financial position, it will likewise show lenders that you are financially sensible. Subsequently, the likelihood of securing a loan will be increased which leads to an improved credit rating.
- 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 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 lenders have in your financial management abilities.
- Don’t hesitate to speak with loan providers
If you intend to apply for a line of credit after your bankruptcy period, or identify what types of options are available to you, don’t hesitate to talk with lenders or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and offer information on what options would work best for your personal circumstances.
Be careful with credit repair companies
There are a lot of credit repair companies that will make all sorts of promises to improve your credit report. Although some of them are reliable in challenging 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 require any guidance in repairing your credit history, or have any questions relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Call Bankruptcy Experts Tennant Creek on 1300 795 575, or alternatively you can visit our website for additional information: www.bankruptcyexpertstennantcreek.com.au