Congratulations! You’ve successfully served your three year period of bankruptcy and have been discharged, so now what? You’ve undoubtedly taken the most suitable actions to address your financial problems by declaring bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still plenty of work required to get your finances back in order. The most significant issue that discharged bankrupts face is their opportunity to borrow money, and the main 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 other than a bankruptcy mark next to your name. There’s been no movement on your credit report, so a blank page will make lending institutions hesitant in lending money to you only because they can’t analyse your repayment behaviours. Repairing your credit history is the best way to get your finances back on course, and make your recovery process as seamless as possible.
How you can repair your credit report after discharge?
Considering that lending institutions haven’t had the ability to analyse your financial management skills for the previous three years, you need to begin presenting healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Acquiring steady and ongoing employment is a great way to enhance your financial security and demonstrate to lenders that you have a regular source of income. Steady employment will enable you to increase your savings and strengthen 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 over time will demonstrate to lending institutions that you are financially reliable 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 registered on your credit report, so lots of credit applications can adversely affect your credit rating. After being discharged, it’s vital that you are realistic and careful 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 a time, and bear in mind 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 managed to save money during the course of your bankruptcy period, contemplate putting part of it into a term deposit account. Not only will you accrue interest and boost your overall financial position, it will additionally show financial institutions that you are financially sensible. Consequently, the likelihood of obtaining 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 of whether it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will evidently improve your credit rating and increase the confidence that lenders have in your financial management skills.
6. Don’t be afraid to talk to lenders
If you wish to request a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t hesitate to speak to banks or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and give recommendations on what options would work best for your individual circumstances.
Be mindful of credit repair agencies
There are a lot of credit repair companies that will make all sorts of promises to improve your credit report. While many of them are effective 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 agencies since 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 history, or have any inquiries regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Speak to Bankruptcy Experts Wyong on 1300 795 575, or alternatively you can visit our website for more information: Bankruptcy Wyong