Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so now what? You’ve clearly taken the right steps to address your financial dilemmas by declaring bankruptcy, and all your debts are well behind you now. However, there’s still a good deal of work involved to get your finances back in order. The greatest issue that discharged bankrupts encounter is their opportunity to borrow money, and the main reason for this is their poor credit rating.
For the previous three 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 a blank page will make lending institutions hesitant in lending money to you solely because they can’t analyse your repayment habits. Repairing your credit rating is the best way to get your finances back in order, and make your recovery process as seamless as possible.
Ways to repair your credit report after discharge?
Since loan providers haven’t had the ability to examine your financial management skills for the past 3 years, you need to begin displaying healthy financial habits. Here’s a list of ways in which you can do this
1. Regular employment
Achieving regular and ongoing employment is a fantastic way to boost your financial security and display to lending institutions that you have a regular income stream. Stable employment will allow you to increase your savings and improve 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 as time go on will display to lenders that you are financially reliable and are capable of making loan repayments. By putting money into a dedicated savings account each month, even a small amount, will improve your credit history.
3. Limit your credit applications
Every time you apply for a line of credit, it is documented on your credit report, so excessive credit applications can adversely impact your credit rating. After being discharged, it’s very important that you are realistic and careful 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 bear in mind that secured loans and options with a guarantor or joint accounts will increase the chances of approval.
4. Consider a term deposit
If you’ve managed to save money during the course of your bankruptcy period, think about putting part of it into a term deposit account. Not only will you accumulate interest and boost your overall financial situation, it will also show lending institutions that you are financially responsible. Subsequently, the likelihood of securing 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 of whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will unquestionably improve your credit rating and increase the confidence that loan providers have in your financial management skills.
6. Don’t be afraid to speak to lending institutions
If you intend to request a line of credit after your bankruptcy period, or identify what types of options are available to you, don’t hesitate to talk to banks or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and give advice on what options would work best for your individual situation.
Be careful with credit repair agencies
There are a number of credit repair agencies that will make all kinds of promises to improve your credit record. While some of them are helpful in disbuting any incorrect listings on your credit history, 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 advice in rebuilding your credit report, or have any inquiries about your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Call Bankruptcy Experts Gold Coast on 1300 879 867, or alternatively you can visit our website for further information: www.bankruptcyexpertsgoldcoast.com.au