Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so now what? You’ve certainly taken the appropriate measures to resolve your financial difficulties by filing for bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still a lot of work involved to get your finances back in order. The most challenging issue that discharged bankrupts face is their opportunity to borrow money, and the reason for this is their bad credit rating.
For the last 3 years, you’ve had no debts to pay off so your credit history has nothing to show besides a bankruptcy mark against your name. There’s been no activity on your credit report, so an empty page will make lenders hesitant in lending money to you simply because they can’t assess your repayment habits. Repairing your credit rating is the best way to get your finances back in order, and make your recovery process as seamless as possible.
How to repair your credit report after discharge?
Given that lenders haven’t been able to review your financial management skills for the last three years, you need to start displaying healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Achieving stable and ongoing employment is an effective way to improve your financial security and display to financial institutions that you have a regular income source. Reliable employment will enable you to increase your savings and enhance 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 in time will display to financial institutions that you are financially reliable 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 rating.
3. Limit your credit applications
Every time you make an application for a line of credit, it is marked on your credit report, so excessive credit applications can adversely affect your credit rating. After being discharged, it’s extremely important that you are practical and vigilant about the kinds of credit you apply for to increase the likelihood of approval. It’s best to make an application for just one line of credit at once, and bear in mind that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
4. Think about a term deposit
If you’ve been able to save money during your bankruptcy period, think about investing part of it into a term deposit account. Not only will you accumulate interest and strengthen your overall financial circumstances, it will also show lending institutions that you are financially reliable. As a result, the likelihood 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 undoubtedly improve your credit history and increase the confidence that loan providers have in your financial management skills.
6. Don’t be afraid to speak with lending institutions
If you wish to apply for a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t hesitate to talk with banks or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and provide information on what options would work best for your individual situation.
Be mindful of credit repair agencies
There are plenty of credit repair firms that will make all kinds of promises to improve your credit report. While 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 companies since 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 with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Call Bankruptcy Bundaberg on 1300 818 575, or alternatively you can visit our website for further information: http://www.bankruptcy-bundaberg.com.au/