Congratulations! You’ve successfully served your three year period of bankruptcy and have been discharged, so now what? You’ve obviously taken the appropriate steps to deal with your financial difficulties by declaring bankruptcy, and all your debts are well behind you now. Despite this, there’s still a good deal of work involved to get your finances back on the right track. The biggest issue that discharged bankrupts face is their opportunity to borrow money, and the reason for this is their poor credit rating.
For the last three years, you’ve had no debts to pay off so your credit history has nothing to show with the exception of a bankruptcy mark next to your name. There’s been no activity on your credit report, so an empty page will make financial institutions reluctant in lending money to you simply because they can’t analyse your repayment habits. Repairing your credit rating is the best way to get your finances back on the right track, and make your recovery process as smooth as possible.
How to rebuild your credit report after discharge?
Considering that loan providers haven’t had the ability to ascertain your financial management skills for the previous three years, you have to start showing healthy financial habits. Here’s a list of ways in which you can do this
- Stable employment
Achieving regular and ongoing employment is a terrific way to improve your financial security and display to loan providers that you have a regular income stream. Stable employment will enable you to increase your savings and enhance your overall financial situation, leading to a better credit rating.
- Increase your savings balance
Your savings account is an asset, so increasing your savings balance gradually will display to lenders that you are financially sensible and are capable of making loan repayments. By transferring money into a dedicated savings account every 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 history, so lots of credit applications can negatively impact your credit history. After being discharged, it’s critical that you are pragmatic and mindful about the types of credit you apply for to increase the likelihood of approval. It’s best to apply for just one line of credit at once, and remember that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
- Contemplate a term deposit
If you’ve been able to save money throughout your bankruptcy period, contemplate putting some of it into a term deposit account. Not only will you accumulate interest and enhance your overall financial situation, it will also show lending institutions that you are financially sensible. 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. Regardless if it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will unquestionably improve your credit history and increase the confidence that financial institutions have in your financial management skills.
- Don’t be afraid to speak with lending institutions
If you want to make an application for a line of credit after your bankruptcy period, or explore what types of options are available to you, don’t hesitate to talk with banks or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and provide suggestions on what options would work best for your personal situation.
Beware of credit repair agencies
There are a number of credit repair agencies that will make all kinds of promises to improve your credit record. Even though many 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 since they “may not always be able to do what they claim they can”.
If you need any advice 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. Talk with Bankruptcy Experts Alice Springs on 1300 795 575, or alternatively you can visit our website for further information: www.bankruptcyexpertsalicesprings.com.au