Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so what now? You’ve unquestionably taken the most appropriate actions to resolve your financial challenges by declaring bankruptcy, and all your debts are well behind you now. Having said this, there’s still a considerable amount of work involved to get your finances back on track. The main issue that discharged bankrupts face is their ability to borrow money, and the reason for this is their poor credit rating.
For the past three years, you’ve had no debts to repay 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 an empty page will make lending institutions hesitant in lending money to you purely because they can’t analyse your repayment habits. Repairing your credit rating is the best way to get your finances back on course, and make your recovery process as seamless as possible.
The best ways to repair your credit report after discharge?
Since lending institutions haven’t had the ability to evaluate your financial management skills for the last three years, you need to begin illustrating healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Attaining steady and ongoing employment is a fantastic way to enhance your financial security and show lending institutions that you have a regular source of income. Steady employment will allow you to increase your savings and strengthen your overall financial situation, leading to a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance in time will display to lending institutions that you are financially dependable 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 rating.
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 affect your credit rating. After being discharged, it’s critical that you are pragmatic and vigilant about the types of credit you apply for to increase your chances of approval. It’s best to apply for just 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.
4. Consider a term deposit
If you’ve managed to save money throughout your bankruptcy period, think about investing part of it into a term deposit account. Not only will you accumulate interest and enhance your overall financial position, it will also show financial institutions that you are financially reliable. As a result, 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 type 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 rating and increase the confidence that lending institutions have in your financial management abilities.
6. Don’t be afraid to speak with lending institutions
If you want to make an application for a line of credit after your bankruptcy period, or uncover what types of options are available to you, don’t be afraid to talk to banks or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and offer information on what options would work best for your individual situation.
Be careful with credit repair firms
There are plenty of credit repair agencies that will make all kinds of promises to improve your credit report. Although 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 report. 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 expertise in rebuilding your credit history, or have any inquiries relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Contact Bankruptcy Experts Shellharbour on 1300 795 575, or alternatively you can visit our website for further information: Bankruptcy Shellharbour