Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so what now? You’ve unquestionably taken the most suitable steps to resolve your financial challenges by filing for bankruptcy, and all your debts are well behind you now. However, there’s still a lot of work required to get your finances back on the right track. The leading issue that discharged bankrupts encounter is their capability to borrow money, and the main reason for this is their poor credit rating.
For the last 3 years, you’ve had no debts to pay back so your credit history has nothing to show except for a bankruptcy mark against your name. There’s been no activity on your credit report, so a blank page will make lending institutions reluctant in lending money to you purely because they can’t analyse your repayment behaviours. 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 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 past 3 years, you will want to begin presenting healthy financial habits. Here’s a list of ways in which you can do this
- Stable employment
Achieving steady and ongoing employment is a terrific way to increase 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 enhance your overall financial circumstances, leading to a better credit rating.
- Increase your savings balance
Your savings account is an asset, so increasing your savings balance as time go on will show financial institutions that you are financially sensible 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 history.
- Limit your credit applications
Every time you apply for a line of credit, it is documented on your credit report, so lots of credit applications can adversely impact your credit rating. After being discharged, it’s crucial that you are pragmatic and careful about the kinds of credit you apply for to increase your chances of approval. It’s best to make an application for only one line of credit at once, and always remember that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
- Think about a term deposit
If you’ve managed to save money throughout your bankruptcy period, think about putting some of it into a term deposit account. Not only will you accumulate interest and improve your overall financial position, it will additionally show loan providers that you are financially sensible. As a result, 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 type 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 most definitely improve your credit rating and increase the confidence that lenders have in your financial management capabilities.
- Don’t hesitate to talk to financial institutions
If you intend to apply for a line of credit after your bankruptcy period, or explore what types of options are available to you, don’t be afraid to speak with lenders or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and provide advice on what options would work best for your personal circumstances.
Be mindful of credit repair firms
There are a lot of credit repair companies that will make all sorts of promises to improve your credit report. Whilst some 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 record. The Government’s MoneySmart website (https://www.moneysmart.gov.au/) advises discharged bankrupts to be “very careful” of these firms because 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 concerns about your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Contact Bankruptcy Experts Port Macquarie on 1300 795 575, or alternatively you can visit our website for further information: www.bankruptcyexpertsportmacquarie.com.au