Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so now what? You’ve certainly taken the most appropriate steps to settle your financial challenges by filing for bankruptcy, and all your debts are well behind you now. However, there’s still plenty of work required to get your finances back on the right track. The most significant issue that discharged bankrupts experience is their capability to borrow money, and the main 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 except for a bankruptcy mark next to your name. There’s been no activity on your credit report, so an empty page will make lenders reluctant in lending money to you purely because they can’t analyse your repayment habits. Rebuilding your credit history is the best way to get your finances back on track, and make your recovery process as seamless as possible.
Ways to repair your credit report after discharge?
Since financial institutions haven’t had the ability to inspect your financial management skills for the previous three years, you will want to start presenting healthy financial habits. Here’s a list of ways in which you can do this
- Regular employment
Attaining 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 income stream. Stable employment will allow you to increase your savings and strengthen 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 over time will illustrate to financial institutions that you are financially sensible and are capable of making loan repayments. By transferring money into a dedicated savings account every month, even a small amount, will improve your credit rating.
- Limit your credit applications
Every time you request a line of credit, it is recorded on your credit history, so excessive credit applications can adversely impact your credit history. After being discharged, it’s integral that you are practical and vigilant about the types of credit you apply for to increase the likelihood of approval. It’s best to make an application for only one 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 opportunity to save money throughout your bankruptcy period, consider investing some of it into a term deposit account. Not only will you accrue interest and boost your overall financial circumstances, it will also show lending institutions that you are financially sensible. Consequently, the likelihood of obtaining 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. Regardless if it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will definitely improve your credit history and increase the confidence that loan providers have in your financial management capabilities.
- Don’t hesitate to talk to loan providers
If you wish to apply for a line of credit after your bankruptcy period, or find out what types of options are available to you, don’t hesitate to speak with banks or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and offer guidance on what options would work best for your personal circumstances.
Be mindful of credit repair agencies
There are loads of credit repair firms that will make all kinds of promises to improve your credit report. Even though some 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 record. The Government’s MoneySmart website (https://www.moneysmart.gov.au/) advises discharged bankrupts to be “very careful” of these companies due to the fact that they “may not always be able to do what they claim they can”.
If you’re in need of any guidance in repairing your credit history, or have any queries relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Get in contact with Bankruptcy Experts Fremantle on 1300 795 575, or alternatively you can visit our website for additional information: www.bankruptcyexpertsfremantle.com.au