Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so now what? You’ve clearly taken the right actions to settle your financial dilemmas by filing for bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still a considerable amount of work required to get your finances back on track. The most prevalent issue that discharged bankrupts encounter is their opportunity 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 repay so your credit history has nothing to show besides a bankruptcy mark next to your name. There’s been no activity on your credit report, so a blank page will make banks and lenders reluctant in lending money to you only because they can’t ascertain your repayment habits. Repairing your credit history is the best way to get your finances back in order, and make your recovery process as seamless as possible.
The best ways to repair your credit report after discharge?
Considering that loan providers haven’t had the ability to evaluate your financial management skills for the last three years, you need to begin displaying healthy financial habits. Here’s a list of ways in which you can do this
1. Regular employment
Securing regular and ongoing employment is a terrific way to increase your financial security and display to financial institutions that you have a regular income source. Stable employment will enable you to increase your savings and enhance your overall financial situation, leading to a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance over time will illustrate to financial institutions that you are financially reliable and are capable of making loan repayments. By transferring money into a specialised savings account each month, even a small amount, will improve your credit history.
3. Limit your credit applications
Whenever you apply for a line of credit, it is documented on your credit history, so excessive credit applications can adversely impact your credit rating. After being discharged, it’s extremely important that you are pragmatic and cautious about the types 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 remember that secured loans and options with a guarantor or joint accounts will increase the probability of approval.
4. Think about a term deposit
If you’ve managed to save money during your bankruptcy period, think about investing some of it into a term deposit account. Not only will you accrue interest and strengthen your overall financial position, it will also show loan providers that you are financially dependable. Consequently, your chances of acquiring 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 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 certainly improve your credit report and increase the confidence that lenders have in your financial management skills.
6. Don’t hesitate to speak with lenders
If you want to request a line of credit after your bankruptcy period, or uncover what types of options are available to you, don’t hesitate to speak to lenders or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and give advice on what options would work best for your individual circumstances.
Be cautious of credit repair firms
There are a number of credit repair agencies that will make all sorts of promises to improve your credit report. Whilst many of them are useful 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 expertise in rebuilding 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. Talk with Bankruptcy Experts Lismore on 1300 795 575, or alternatively you can visit our website for additional information: www.bankruptcyexpertslismore.com.au