Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so what now? You’ve clearly taken the appropriate measures to deal with your financial dilemmas by declaring bankruptcy, and all your debts are well behind you now. However, there’s still a considerable amount of work required to get your finances back on the right track. The most significant issue that discharged bankrupts confront is their ability to borrow money, and the reason for this is their poor credit rating.
For the previous 3 years, you’ve had no debts to pay off so your credit history has nothing to show with the exception of a bankruptcy mark against your name. There’s been no movement on your credit report, so a blank page will make lenders reluctant in lending money to you purely because they can’t assess your repayment behaviours. Rebuilding 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 repair your credit report after discharge?
Due to the fact that lending institutions haven’t been able to evaluate your financial management skills for the last 3 years, you will need to start displaying healthy financial habits. Here’s a list of ways in which you can do this
- Stable employment
Obtaining steady and ongoing employment is a great way to improve your financial security and display to loan providers that you have a regular income source. Steady employment will allow you to increase your savings and bolster your overall financial condition, resulting in a better credit rating.
- Increase your savings balance
Your savings account is an asset, so increasing your savings balance in time will illustrate to lending institutions that you are financially responsible 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.
- Limit your credit applications
Whenever you make an application for a line of credit, it is marked on your credit report, so too many credit applications can adversely impact your credit rating. After being discharged, it’s very important that you are realistic and vigilant about the kinds of credit you apply for to increase your chances 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 had the chance to save money during the course of your bankruptcy period, think about putting some of it into a term deposit account. Not only will you accumulate interest and strengthen your overall financial circumstances, it will likewise show loan providers that you are financially reliable. As a result, your chances 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 kind of repayment on time. Whether it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will most certainly improve your credit history and increase the confidence that financial institutions have in your financial management skills.
- Don’t be afraid to talk with lending institutions
If you wish to apply for a line of credit after your bankruptcy period, or uncover what types of options are available to you, don’t hesitate to talk to banks or other financial institutions to discuss your situation. They are in the best position to advise of your eligibility, and give guidance on what options would work best for your personal circumstances.
Beware of credit repair companies
There are a lot of credit repair firms that will make all kinds of promises to improve your credit record. While many of them are helpful 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 need any help and support in rebuilding your credit history, or have any concerns concerning your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Call Bankruptcy Experts Dubbo on 1300 795 575, or alternatively you can visit our website for additional information: www.bankruptcyexpertsdubbo.com.au