Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so what now? You’ve clearly taken the most appropriate steps to settle your financial difficulties by filing for bankruptcy, and all your debts are well behind you now. Despite this, there’s still a considerable amount of work involved to get your finances back in order. The most challenging issue that discharged bankrupts confront is their ability 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 pay back so your credit history has nothing to show except for a bankruptcy mark against your name. There’s been no movement on your credit report, so an empty page will make financial institutions reluctant in lending money to you solely because they can’t ascertain your repayment behaviours. Rebuilding your credit history is the best way to get your finances back on the right track, and make your recovery process as smooth as possible.
How you can repair your credit report after discharge?
Since lending institutions haven’t been able to assess your financial management skills for the past three years, you will want to begin showing healthy financial habits. Here’s a list of ways in which you can do this
- Reliable employment
Obtaining reliable and ongoing employment is an excellent way to improve your financial security and display to financial institutions that you have a regular stream of income. Reliable employment will allow you to increase your savings and strengthen 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 with time will display to loan providers that you are financially dependable and are capable of making loan repayments. By transferring money into a specialised savings account every month, even a small amount, will improve your credit history.
- Limit your credit applications
Every time you make an application for a line of credit, it is registered on your credit report, so too many credit applications can negatively affect your credit rating. After being discharged, it’s pivotal that you are sensible and vigilant about the types of credit you apply for to increase the likelihood of approval. It’s best to make an application 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.
- Contemplate a term deposit
If you’ve been able to save money during your bankruptcy period, consider investing part of it into a term deposit account. Not only will you accrue interest and strengthen your overall financial position, it will additionally show lending institutions that you are financially reliable. Consequently, 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. Whether or not it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will certainly improve your credit history and increase the confidence that loan providers have in your financial management capabilities.
- Don’t hesitate to talk to financial institutions
If you want to apply for a line of credit after your bankruptcy period, or identify what types of options are available to you, don’t be afraid to speak to banks or other financial institutions to discuss your situation. They are in the best position to advise of your eligibility, and offer insight on what options would work best for your personal situation.
Be careful with credit repair companies
There are lots of credit repair firms that will make all sorts of promises to improve your credit record. Although many of them are effective in challenging 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 companies due to the fact that they “may not always be able to do what they claim they can”.
If you need any guidance in repairing your credit report, or have any concerns about your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Speak to Bankruptcy Experts Mildura on 1300 795 575, or alternatively you can visit our website for further information: www.bankruptcyexpertsmildura.com.au