Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so now what? You’ve certainly taken the most appropriate actions to settle your financial dilemmas by filing for bankruptcy, and all your debts are well behind you now. However, there’s still plenty of work required to get your finances back in order. The biggest issue that discharged bankrupts confront is their capability to borrow money, and the main reason for this is their poor 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 against your name. There’s been no movement on your credit report, so an empty page will make banks and lenders hesitant in lending money to you solely because they can’t evaluate your repayment behaviours. Repairing your credit rating is the best way to get your finances back on the right track, and make your recovery process as seamless as possible.
How to repair your credit report after discharge?
Since financial institutions haven’t been able to analyse your financial management skills for the last 3 years, you need to start illustrating healthy financial habits. Here’s a list of ways in which you can do this
- Reliable employment
Obtaining regular and ongoing employment is an excellent way to boost your financial security and display to financial institutions that you have a regular stream of income. Reliable employment will allow you to increase your savings and bolster 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 with time will show lending institutions that you are financially dependable and are capable of making loan repayments. By putting money into a dedicated savings account each month, even a small amount, will improve your credit rating.
- Limit your credit applications
Each time you request a line of credit, it is recorded on your credit history, so excessive credit applications can negatively impact your credit history. After being discharged, it’s imperative that you are sensible and cautious about the kinds of credit you apply for to increase your chances of approval. It’s best to request just one line of credit at once, and keep in mind that secured loans and options with a guarantor or joint accounts will increase the probability of approval.
- Think about a term deposit
If you’ve managed to save money during your bankruptcy period, consider investing part of it into a term deposit account. Not only will you accumulate interest and boost your overall financial position, it will additionally show lending institutions that you are financially sensible. Subsequently, your chances of obtaining 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 type 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 most certainly improve your credit rating and increase the confidence that loan providers have in your financial management abilities.
- Don’t be afraid to speak to loan providers
If you wish 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 speak with banks or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and give recommendations on what options would work best for your individual circumstances.
Beware of credit repair agencies
There are loads of credit repair firms that will make all kinds of promises to improve your credit record. Even though many of them are helpful in disbuting any incorrect listings on your credit record, 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 because they “may not always be able to do what they claim they can”.
If you need any help and support in rebuilding your credit history, or have any queries concerning your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Get in touch with Bankruptcy Experts Emerald on 1300 795 575, or alternatively you can visit our website for more information: www.bankruptcyexpertsemerald.com.au