Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so what now? You’ve undoubtedly taken the most appropriate actions to resolve your financial dilemmas by filing for bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still a considerable amount of work involved to get your finances back on track. The most challenging issue that discharged bankrupts encounter is their opportunity to borrow money, and the reason for this is their bad credit rating.
For the past 3 years, you’ve had no debts to pay back 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 analyse your repayment habits. Repairing your credit rating is the best way to get your finances back in order, and make your recovery process as seamless as possible.
How to rebuild your credit report after discharge?
Considering that loan providers haven’t had the ability to assess 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
1. Steady employment
Attaining reliable and ongoing employment is an excellent way to increase your financial security and display to lending institutions that you have a regular income stream. Reliable employment will enable you to increase your savings and bolster 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 gradually will demonstrate to lenders that you are financially sensible and are capable of making loan repayments. By putting money into a dedicated savings account every month, even a small amount, will improve your credit rating.
3. Limit your credit applications
Whenever you apply for a line of credit, it is registered on your credit history, so too many credit applications can adversely affect your credit history. After being discharged, it’s critical that you are practical and careful about the types of credit you apply for to increase your chances of approval. It’s best to apply 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 chances of approval.
4. Contemplate a term deposit
If you’ve managed to save money during the course of your bankruptcy period, consider investing some of it into a term deposit account. Not only will you accumulate interest and strengthen your overall financial circumstances, it will additionally show financial institutions that you are financially responsible. Subsequently, the likelihood 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 evidently improve your credit report and increase the confidence that loan providers have in your financial management abilities.
6. Don’t be afraid to speak with loan providers
If you want to request a line of credit after your bankruptcy period, or identify what types of options are available to you, don’t be afraid to talk with lenders or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and give guidance on what options would work best for your individual situation.
Beware of credit repair agencies
There are a number of credit repair agencies that will make all sorts of promises to improve your credit record. Whilst 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 agencies since they “may not always be able to do what they claim they can”.
If you need any help and support in rebuilding your credit history, or have any questions relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Speak with Bankruptcy Experts Tamworth on 1300 795 575, or alternatively you can visit our website for more information: www.bankruptcyexpertsgeraldton.com.au