Congratulations! You’ve successfully served your three year period of bankruptcy and have been discharged, so what now? You’ve certainly taken the most appropriate actions to address your financial dilemmas by filing for bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still a considerable amount of work required to get your finances back on track. The major issue that discharged bankrupts experience is their ability to borrow money, and the reason for this is their bad credit rating.
For the last three years, you’ve had no debts to pay off so your credit history has nothing to show except for a bankruptcy mark against your name. There’s been no activity on your credit report, so an empty page will make lending institutions hesitant in lending money to you only because they can’t ascertain your repayment behaviours. 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 rebuild your credit report after discharge?
Since lenders haven’t had the ability to analyse your financial management skills for the past three years, you have to start demonstrating healthy financial habits. Here’s a list of ways in which you can do this
1. Reliable employment
Attaining reliable and ongoing employment is a terrific way to improve your financial security and display to lending institutions that you have a regular source of income. Stable employment will allow you to increase your savings and bolster your overall financial condition, leading to a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance gradually will demonstrate to lending institutions that you are financially sensible 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 rating.
3. Limit your credit applications
Whenever you make an application for a line of credit, it is marked on your credit history, so lots of credit applications can negatively impact your credit history. After being discharged, it’s imperative that you are sensible and vigilant about the types of credit you apply for to increase the likelihood of approval. It’s best to make an application for just one line of credit at once, and bear in mind that secured loans and options with a guarantor or joint accounts will increase the probability of approval.
4. Contemplate a term deposit
If you’ve managed to save money throughout your bankruptcy period, contemplate putting some of it into a term deposit account. Not only will you accrue interest and improve your overall financial situation, it will likewise show financial institutions that you are financially dependable. Therefore, 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 kind of repayment on time. Regardless if it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will evidently improve your credit history and increase the confidence that lenders have in your financial management capabilities.
6. Don’t be afraid to talk to lenders
If you want to make an application for a line of credit after your bankruptcy period, or identify what types of options are available to you, don’t hesitate to speak with banks or other financial institutions to discuss your situation. They are in the best position to advise of your eligibility, and offer advice on what options would work best for your personal situation.
Be cautious of credit repair firms
There are a number of credit repair agencies that will make all kinds of promises to improve your credit report. While 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 companies since they “may not always be able to do what they claim they can”.
If you require any support in rebuilding your credit report, or have any concerns with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Talk with Bankruptcy Experts Hobart on 1300 795 575, or alternatively you can visit our website for further information: www.bankruptcyexpertshobart.com.au