Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so what now? You’ve clearly taken the right measures to settle your financial issues by filing for bankruptcy, and all your debts are well behind you now. However, there’s still a good deal of work required to get your finances back on the right track. The leading issue that discharged bankrupts encounter is their ability to borrow money, and the main reason for this is their bad credit rating.
For the previous three years, you’ve had no debts to pay off 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 financial institutions hesitant in lending money to you simply because they can’t inspect 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 seamless as possible.
The best ways to repair your credit report after discharge?
Considering that lenders haven’t been able to examine your financial management skills for the past three years, you have to begin illustrating healthy financial habits. Here’s a list of ways in which you can do this
1. Regular employment
Attaining consistent and ongoing employment is a fantastic way to enhance your financial security and demonstrate to lending institutions that you have a regular income stream. Steady employment will enable you to increase your savings and improve your overall financial circumstances, resulting in a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance in time will illustrate to loan providers that you are financially sensible and are capable of making loan repayments. By transferring money into a specialised savings account each month, even a small amount, will improve your credit rating.
3. 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 impact your credit history. After being discharged, it’s pivotal that you are realistic and careful about the kinds of credit you apply for to increase your chances of approval. It’s best to request only one line of credit at once, and always remember that secured loans and options with a guarantor or joint accounts will increase the chances of approval.
4. Think about a term deposit
If you’ve had the chance to save money during the course of your bankruptcy period, think about investing some of it into a term deposit account. Not only will you accumulate interest and strengthen your overall financial circumstances, it will likewise 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.
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. Whether it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will undoubtedly improve your credit report and increase the confidence that lending institutions have in your financial management skills.
6. Don’t hesitate to talk with financial institutions
If you intend to apply for a line of credit after your bankruptcy period, or explore 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 offer information on what options would work best for your personal circumstances.
Be careful with credit repair companies
There are plenty of credit repair companies that will make all sorts of promises to improve your credit record. While 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 since they “may not always be able to do what they claim they can”.
If you require any expertise in repairing your credit report, or have any queries relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Get in touch with Bankruptcy Australia on 1300 795 575, or alternatively you can visit our website for more information: www.bankruptcy-australia.net.au