Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so now what? You’ve obviously taken the most suitable steps to resolve your financial difficulties by declaring bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still a lot of work required to get your finances back on the right track. The most prevalent issue that discharged bankrupts experience is their capability to borrow money, and the reason for this is their bad 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 next to your name. There’s been no movement on your credit report, so an empty page will make lenders hesitant in lending money to you only because they can’t evaluate your repayment behaviours. Repairing your credit rating is the best way to get your finances back on track, and make your recovery process as smooth as possible.
How you can rebuild your credit report after discharge?
Given that lenders haven’t been able to analyse your financial management skills for the past 3 years, you need to begin presenting healthy financial habits. Here’s a list of ways in which you can do this
1. Regular employment
Obtaining regular and ongoing employment is a great way to increase your financial security and display to lenders that you have a regular income stream. Regular employment will enable you to increase your savings and improve your overall financial circumstances, resulting in 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 demonstrate to lending institutions that you are financially reliable and are capable of making loan repayments. By putting money into a specialised savings account every month, even a small amount, will improve your credit rating.
3. Limit your credit applications
Each time you apply for a line of credit, it is registered on your credit history, so too many credit applications can negatively affect your credit history. After being discharged, it’s imperative that you are realistic and vigilant about the kinds of credit you apply for to increase the likelihood of approval. It’s best to apply for only one line of credit at once, and bear in mind that secured loans and options with a guarantor or joint accounts will increase the probability of approval.
4. Contemplate a term deposit
If you’ve had the opportunity to save money during the course of 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 situation, it will additionally show financial institutions that you are financially dependable. Therefore, 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. Whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will undoubtedly improve your credit rating and increase the confidence that lenders have in your financial management skills.
6. Don’t be afraid to talk to lenders
If you intend to request a line of credit after your bankruptcy period, or uncover what types of options are available to you, don’t be reluctant to talk to lenders or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and offer insight on what options would work best for your individual situation.
Be cautious of credit repair companies
There are a lot of credit repair agencies that will make all kinds of promises to improve your credit report. While many of them are effective in challenging 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 firms since they “may not always be able to do what they claim they can”.
If you require any assistance in repairing your credit report, or have any questions concerning your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Talk to Bankruptcy Experts Townsville on 1300 795 575, or alternatively you can visit our website for additional information: Bankruptcy Townsville