Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so what now? You’ve certainly taken the appropriate steps to resolve your financial difficulties by filing for bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still a lot of work involved to get your finances back on the right track. The biggest issue that discharged bankrupts face is their ability 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 back so your credit history has nothing to show besides a bankruptcy mark next to your name. There’s been no movement on your credit report, so an empty page will make lenders 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 track, and make your recovery process as seamless as possible.
How to repair your credit report after discharge?
Due to the fact that lenders haven’t been able to inspect your financial management skills for the last three years, you will need to start presenting healthy financial habits. Here’s a list of ways in which you can do this
- Reliable employment
Acquiring reliable and ongoing employment is a great way to enhance your financial security and show banks and financial institutions that you have a regular stream of income. Reliable employment will enable you to increase your savings and strengthen 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 as time go on will demonstrate to lending institutions that you are financially responsible and are capable of making loan repayments. By putting money into a specialised savings account every month, even a small amount, will improve your credit history.
- Limit your credit applications
Every time you request a line of credit, it is documented on your credit report, so too many credit applications can negatively impact your credit history. After being discharged, it’s essential that you are pragmatic and vigilant about the types of credit you apply for to increase your chances of approval. It’s best to apply for a single line of credit at a time, and always remember that secured loans and options with a guarantor or joint accounts will increase the chances of approval.
- Consider a term deposit
If you’ve had the chance to save money throughout 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 loan providers that you are financially reliable. Consequently, your chances of acquiring 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. Whether or not it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will most certainly improve your credit rating and increase the confidence that lenders have in your financial management abilities.
- Don’t hesitate to talk with lenders
If you intend to apply for a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t hesitate to speak to lenders or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and provide recommendations on what options would work best for your personal situation.
Be careful with credit repair agencies
There are a lot of credit repair firms that will make all sorts of promises to improve your credit record. Although many of them are reliable in disbuting 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 agencies due to the fact that 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 questions regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Speak with Bankruptcy Experts Cassowary Coast on 1300 795 575, or alternatively you can visit our website for further information: www.bankruptcyexpertscassowarycoast.com.au