Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so now what? You’ve definitely taken the most appropriate actions to resolve your financial troubles by filing for bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still a good deal of work required to get your finances back on track. The most prevalent issue that discharged bankrupts encounter is their ability to borrow money, and the reason for this is their bad credit rating.
For the previous three 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 a blank page will make lenders reluctant in lending money to you only because they can’t assess your repayment behaviours. Repairing your credit history is the best way to get your finances back on course, and make your recovery process as smooth as possible.
How to repair your credit report after discharge?
Given that lenders haven’t had the ability to examine your financial management skills for the past 3 years, you have to start presenting healthy financial habits. Here’s a list of ways in which you can do this
1. Reliable employment
Securing consistent and ongoing employment is a terrific way to enhance your financial security and display to lending institutions that you have a regular stream of income. Reliable employment will enable you to increase your savings and improve 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 with time will display to lending institutions that you are financially responsible and are capable of making loan repayments. By transferring money into a dedicated savings account each month, even a small amount, will improve your credit history.
3. Limit your credit applications
Each time you make an application for a line of credit, it is recorded on your credit report, so too many credit applications can adversely impact your credit rating. After being discharged, it’s crucial that you are pragmatic and mindful about the kinds of credit you apply for to increase the likelihood of approval. It’s best to apply for a single line of credit at a time, and remember that secured loans and options with a guarantor or joint accounts will increase the chances of approval.
4. Contemplate a term deposit
If you’ve had the capacity to save money during the course of your bankruptcy period, contemplate putting part of it into a term deposit account. Not only will you accumulate interest and boost your overall financial situation, it will likewise show financial institutions that you are financially responsible. As a result, your chances 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 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 definitely improve your credit history and increase the confidence that lenders have in your financial management skills.
6. Don’t be afraid to speak to financial institutions
If you want to make an application for a line of credit after your bankruptcy period, or identify what types of options are available to you, don’t be afraid to talk to lenders or other financial institutions to discuss 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 circumstances.
Be cautious of credit repair firms
There are numerous credit repair firms that will make all kinds of promises to improve your credit record. Although many of them are effective in disbuting any incorrect listings on your credit history, 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 because they “may not always be able to do what they claim they can”.
If you need any support in rebuilding your credit report, 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 Northern Rivers on 1300 795 575, or alternatively you can visit our website for more information: Bankruptcy Northern rivers