Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so now what? You’ve obviously taken the most suitable actions to settle your financial issues 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 the right track. The leading issue that discharged bankrupts experience is their ability to borrow money, and the reason for this is their bad credit rating.
For the last 3 years, you’ve had no debts to pay back so your credit history has nothing to show other than a bankruptcy mark next to your name. There’s been no activity on your credit report, so an empty page will make lending institutions hesitant in lending money to you simply 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?
Considering that loan providers haven’t been able to check your financial management skills for the previous 3 years, you will need to start showing healthy financial habits. Here’s a list of ways in which you can do this
- Stable employment
Attaining regular and ongoing employment is an effective way to boost your financial security and demonstrate to loan providers that you have a regular income stream. Stable employment will allow you to increase your savings and improve your overall financial condition, resulting in a better credit rating.
- 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 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.
- Limit your credit applications
Every time you request a line of credit, it is recorded on your credit history, so too many credit applications can adversely affect your credit rating. After being discharged, it’s essential that you are practical and careful about the kinds of credit you apply for to increase the likelihood of approval. It’s best to apply for just 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 likelihood of approval.
- Think about a term deposit
If you’ve had the opportunity to save money throughout your bankruptcy period, consider investing part of it into a term deposit account. Not only will you accrue interest and enhance your overall financial circumstances, it will likewise show loan providers that you are financially reliable. Therefore, the likelihood 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 if it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will definitely improve your credit rating and increase the confidence that lending institutions have in your financial management abilities.
- Don’t hesitate to talk with lenders
If you intend to make an application for a line of credit after your bankruptcy period, or identify what types of options are available to you, don’t hesitate to talk with lenders or other financial institutions to review 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.
Be cautious of credit repair agencies
There are lots of credit repair firms that will make all kinds of promises to improve your credit record. Whilst some of them are useful in challenging any incorrect listings on your credit record, 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 since they “may not always be able to do what they claim they can”.
If you’re in need of any assistance 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. Speak to Gold Coast Bankruptcy Centre on 1300 795 575, or alternatively you can visit our website for further information: www.goldcoastbankruptcycentre.com.au