Congratulations! You’ve successfully served your three year period of bankruptcy and have been discharged, so now what? You’ve unquestionably taken the appropriate steps to address your financial issues by declaring bankruptcy, and all your debts are well behind you now. Having said this, there’s still a considerable amount of work involved to get your finances back on the right track. The major issue that discharged bankrupts experience is their ability to borrow money, and the main reason for this is their bad credit rating.
For the last three years, you’ve had no debts to repay so your credit history has nothing to show other than 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 solely because they can’t analyse your repayment habits. Repairing your credit history is the best way to get your finances back on the right track, and make your recovery process as seamless as possible.
How you can rebuild your credit report after discharge?
Since financial institutions haven’t been able to examine your financial management skills for the last 3 years, you will want to begin illustrating healthy financial habits. Here’s a list of ways in which you can do this
- Stable employment
Obtaining consistent and ongoing employment is an excellent way to enhance your financial security and display to lenders that you have a regular source of income. Steady employment will allow you to increase your savings and bolster your overall financial situation, resulting in a better credit rating.
- Increase your savings balance
Your savings account is an asset, so increasing your savings balance as time go on will demonstrate to lending institutions that you are financially responsible and are capable of making loan repayments. By transferring money into a dedicated savings account every month, even a small amount, will improve your credit rating.
- Limit your credit applications
Every time you apply for a line of credit, it is recorded on your credit report, so too many credit applications can negatively impact your credit history. After being discharged, it’s important that you are practical and mindful about the types of credit you apply for to increase the likelihood of approval. It’s best to request a single line of credit at once, and always remember that secured loans and options with a guarantor or joint accounts will increase the chances of approval.
- Think about a term deposit
If you’ve been able to save money during the course of your bankruptcy period, consider 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 lenders that you are financially sensible. Subsequently, your chances of acquiring 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 if it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will most certainly improve your credit report and increase the confidence that loan providers have in your financial management capabilities.
- Don’t be afraid to talk to lenders
If you wish to make an application for a line of credit after your bankruptcy period, or explore what types of options are available to you, don’t hesitate to talk with lenders or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and provide recommendations on what options would work best for your individual circumstances.
Be cautious of credit repair agencies
There are a lot of credit repair companies that will make all sorts of promises to improve your credit report. Although 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 report. The Government’s MoneySmart website (https://www.moneysmart.gov.au/) advises discharged bankrupts to be “very careful” of these firms due to the fact that they “may not always be able to do what they claim they can”.
If you require any help and support in rebuilding your credit report, or have any queries regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Get in contact with Bankruptcy Experts Toowoomba on 1300 795 575, or alternatively you can visit our website for more information: Bankruptcy Experts Toowoomba