Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so now what? You’ve undoubtedly taken the most suitable measures to settle your financial challenges by declaring bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still plenty of work involved to get your finances back in order. The greatest issue that discharged bankrupts face is their ability to borrow money, and the reason for this is their bad credit rating.
For the last 3 years, you’ve had no debts to pay off so your credit history has nothing to show other than a bankruptcy mark next to your name. There’s been no movement on your credit report, so a blank page will make lending institutions hesitant in lending money to you simply because they can’t inspect your repayment behaviours. Repairing your credit rating is the best way to get your finances back on course, and make your recovery process as smooth as possible.
Ways to repair your credit report after discharge?
Since lenders haven’t had the ability to ascertain your financial management skills for the past three years, you need to begin exhibiting healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Obtaining reliable and ongoing employment is an effective way to enhance your financial security and display to financial institutions that you have a regular source of income. Stable employment will enable you to increase your savings and strengthen your overall financial condition, resulting in a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance gradually will demonstrate to loan providers 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 history.
3. Limit your credit applications
Whenever you apply for a line of credit, it is documented on your credit history, so excessive credit applications can adversely impact your credit rating. After being discharged, it’s integral that you are sensible and vigilant about the kinds of credit you apply for to increase your chances of approval. It’s best to make an application for only one line of credit at a time, and bear in mind that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
4. Consider a term deposit
If you’ve been able to save money throughout your bankruptcy period, think about investing some of it into a term deposit account. Not only will you accumulate interest and improve your overall financial situation, it will additionally show financial institutions that you are financially sensible. Subsequently, the likelihood of acquiring 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 rent, electricity, 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 lenders have in your financial management skills.
6. Don’t hesitate to talk with lenders
If you wish to request a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t hesitate to speak with banks or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and offer insight on what options would work best for your personal circumstances.
Be cautious of credit repair agencies
There are plenty of credit repair agencies that will make all kinds of promises to improve your credit record. While many of them are effective in disbuting any incorrect listings on your credit record, 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 agencies since they “may not always be able to do what they claim they can”.
If you need any guidance in repairing your credit history, or have any concerns with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Get in touch with Bankruptcy Experts Parramatta on 1300 795 575, or alternatively you can visit our website for additional information: www.bankruptcyexpertsparramatta.com.au