Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so now what? You’ve undoubtedly taken the right measures to resolve your financial problems by filing for bankruptcy, and all your debts are well behind you now. Despite this, there’s still a lot of work required to get your finances back on track. The leading issue that discharged bankrupts face is their ability 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 off 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 a blank page will make lending institutions reluctant in lending money to you only because they can’t inspect your repayment behaviours. Rebuilding your credit history is the best way to get your finances back on track, and make your recovery process as smooth as possible.
The best ways to repair your credit report after discharge?
Considering that financial institutions haven’t had the ability to analyse your financial management skills for the past 3 years, you need to start displaying healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Acquiring steady and ongoing employment is an excellent way to boost your financial security and display to banks and financial institutions that you have a regular stream of income. Reliable employment will enable you to increase your savings and improve your overall financial circumstances, leading to a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance as time go on will illustrate to lenders that you are financially sensible 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 request a line of credit, it is registered on your credit report, so excessive credit applications can negatively impact your credit rating. After being discharged, it’s vital that you are realistic and vigilant about the kinds of credit you apply for to increase the likelihood of approval. It’s best to apply for only one line of credit at once, and always remember that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
4. Consider a term deposit
If you’ve had the opportunity to save money during 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 additionally show lending institutions that you are financially responsible. Therefore, 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 kind 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 unquestionably improve your credit report and increase the confidence that financial institutions have in your financial management capabilities.
6. Don’t hesitate to talk with lending institutions
If you intend 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 be reluctant to talk to lenders or other financial institutions to discuss your circumstances. They are in the best position to advise of your eligibility, and give information on what options would work best for your individual circumstances.
Be mindful of credit repair companies
There are a lot of credit repair agencies that will make all sorts of promises to improve your credit record. Even though some of them are helpful in challenging any incorrect listings on your credit record, 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 because they “may not always be able to do what they claim they can”.
If you’re in need of any guidance 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 Mackay on 1300 795 575, or alternatively you can visit our website for more information: www.bankruptcyexpertsmackay.com.au