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 difficulties by declaring bankruptcy, and all your debts are well behind you now. However, there’s still a lot of work involved to get your finances back on the right track. The most prevalent issue that discharged bankrupts encounter is their opportunity to borrow money, and the main 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 an empty page will make lending institutions reluctant in lending money to you simply because they can’t assess your repayment habits. Repairing your credit history is the best way to get your finances back on the right track, and make your recovery process as smooth as possible.
Ways to repair your credit report after discharge?
Given that financial institutions haven’t been able to review your financial management skills for the last three years, you will need to start displaying healthy financial habits. Here’s a list of ways in which you can do this
1. Reliable employment
Achieving steady and ongoing employment is an effective way to increase your financial security and demonstrate to lending institutions that you have a regular source of income. Stable employment will allow you to increase your savings and strengthen your overall financial situation, resulting in a better credit rating.
2. 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 sensible and are capable of making loan repayments. By putting money into a dedicated savings account every month, even a small amount, will improve your credit rating.
3. Limit your credit applications
Each time you request a line of credit, it is recorded on your credit report, so too many credit applications can negatively impact your credit rating. After being discharged, it’s very important that you are sensible and mindful about the types of credit you apply for to increase the likelihood of approval. It’s best to request 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 probability of approval.
4. Consider a term deposit
If you’ve been able to save money during your bankruptcy period, think about investing part of it into a term deposit account. Not only will you accumulate interest and boost your overall financial situation, it will additionally show lending institutions that you are financially sensible. Therefore, your chances of obtaining 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. Whether or not it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will unquestionably improve your credit history and increase the confidence that lenders have in your financial management skills.
6. Don’t hesitate to speak to lending institutions
If you intend to apply for a line of credit after your bankruptcy period, or uncover what types of options are available to you, don’t hesitate to speak to lenders or other financial institutions to review your situation. They are in the best position to advise of your eligibility, and give information on what options would work best for your personal circumstances.
Be mindful of credit repair companies
There are numerous credit repair companies that will make all sorts of promises to improve your credit record. Even though some of them are useful in disbuting any incorrect listings on your credit record, 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 help and support in repairing your credit report, or have any concerns relating to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Talk with Bankruptcy Experts Cairns on 1300 795 575, or alternatively you can visit our website for additional information: www.bankruptcyexpertscairns.com.au