Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so now what? You’ve unquestionably taken the appropriate steps to resolve your financial dilemmas by filing for bankruptcy, and all your debts are well behind you now. Having said this, there’s still a good deal of work required to get your finances back on the right track. The most significant issue that discharged bankrupts experience is their ability to borrow money, and the main reason for this is their poor credit rating.
For the last three years, you’ve had no debts to pay off so your credit history has nothing to show besides a bankruptcy mark against your name. There’s been no movement on your credit report, so an empty page will make financial institutions reluctant in lending money to you only because they can’t inspect your repayment behaviours. Rebuilding your credit history is the best way to get your finances back on the right track, and make your recovery process as seamless as possible.
How to rebuild your credit report after discharge?
Since loan providers haven’t had the ability to inspect your financial management skills for the past 3 years, you will want to begin demonstrating healthy financial habits. Here’s a list of ways in which you can do this
- Stable employment
Attaining consistent and ongoing employment is a fantastic way to improve your financial security and demonstrate to lending institutions that you have a regular source of income. Regular employment will allow you to increase your savings and improve your overall financial condition, leading to a better credit rating.
- Increase your savings balance
Your savings account is an asset, so increasing your savings balance with time will display to lending institutions that you are financially dependable and are capable of making loan repayments. By transferring money into a specialised savings account every month, even a small amount, will improve your credit rating.
- Limit your credit applications
Whenever you make an application for a line of credit, it is marked on your credit report, so excessive credit applications can negatively affect your credit history. After being discharged, it’s essential that you are realistic and vigilant about the kinds of credit you apply for to increase your chances of approval. It’s best to request a single line of credit at once, and always remember that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
- Consider a term deposit
If you’ve been able to save money during your bankruptcy period, think about putting part of it into a term deposit account. Not only will you accumulate interest and strengthen your overall financial position, it will likewise show financial institutions that you are financially sensible. Consequently, your chances of acquiring a loan will be increased which leads to an improved credit rating.
- 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 electricity, rent, or even a secured loan in your name, making these repayments on time will unquestionably improve your credit report and increase the confidence that financial institutions have in your financial management capabilities.
- Don’t hesitate to talk with lending institutions
If you intend to request a line of credit after your bankruptcy period, or find out what types of options are available to you, don’t be reluctant to talk with banks or other financial institutions to discuss your situation. They are in the best position to advise of your eligibility, and provide guidance on what options would work best for your personal circumstances.
Beware of credit repair companies
There are a number of credit repair firms that will make all sorts of promises to improve your credit record. Although many 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 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 repairing your credit report, or have any queries with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Reach out to Bankruptcy Experts Gosford on 1300 795 575, or alternatively you can visit our website for further information: www.bankruptcyexpertsgosford.com.au