Congratulations! You’ve successfully served your three year period of bankruptcy and have been discharged, so now what? You’ve unquestionably taken the most appropriate actions to settle your financial challenges by declaring bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still a considerable amount of work involved to get your finances back on the right track. The most significant issue that discharged bankrupts face is their capability 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 back so your credit history has nothing to show with the exception of a bankruptcy mark against your name. There’s been no activity on your credit report, so a blank page will make lenders reluctant in lending money to you solely 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.
The best ways to rebuild your credit report after discharge?
Since loan providers haven’t had the ability to examine your financial management skills for the past three years, you need to begin showing healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Achieving stable and ongoing employment is an effective way to increase your financial security and show loan providers that you have a regular income stream. Steady employment will enable 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 with time will show financial institutions that you are financially sensible 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 rating.
3. Limit your credit applications
Every time you request a line of credit, it is marked on your credit history, so lots of credit applications can adversely impact your credit history. After being discharged, it’s essential that you are pragmatic and careful about the types of credit you apply for to increase your chances of approval. It’s best to apply 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 probability of approval.
4. Consider a term deposit
If you’ve been able to save money throughout your bankruptcy period, consider putting some of it into a term deposit account. Not only will you accumulate interest and improve your overall financial situation, it will likewise show lenders that you are financially reliable. Consequently, your chances 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 type of repayment on time. Regardless of whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will evidently improve your credit rating and increase the confidence that financial institutions have in your financial management capabilities.
6. Don’t hesitate to talk to lenders
If you wish to apply for a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t be reluctant to talk to lenders or other financial institutions to discuss your circumstances. They are in the best position to advise of your eligibility, and give recommendations on what options would work best for your personal circumstances.
Beware of credit repair firms
There are lots of credit repair companies that will make all sorts of promises to improve your credit record. While some of them are useful in disbuting 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 because they “may not always be able to do what they claim they can”.
If you’re in need of any help in rebuilding your credit history, or have any concerns regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Call Bankruptcy Experts Taree on 1300 795 575, or alternatively you can visit our website for additional information: www.bankruptcyexpertstaree.com.au