Congratulations! You’ve successfully served your three year period of bankruptcy and have been discharged, so what now? You’ve certainly taken the most appropriate actions to deal with your financial dilemmas by declaring bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still a good deal of work involved to get your finances back on track. The main issue that discharged bankrupts confront is their capability to borrow money, and the main reason for this is their poor credit rating.
For the last 3 years, you’ve had no debts to pay off so your credit history has nothing to show except for a bankruptcy mark against your name. There’s been no activity on your credit report, so an empty page will make financial institutions hesitant in lending money to you purely because they can’t inspect your repayment habits. Rebuilding your credit rating is the best way to get your finances back on course, and make your recovery process as smooth as possible.
How to repair your credit report after discharge?
Given that loan providers haven’t been able to evaluate your financial management skills for the last three years, you will need to begin illustrating healthy financial habits. Here’s a list of ways in which you can do this
- Regular employment
Achieving consistent and ongoing employment is an effective way to enhance your financial security and display to financial institutions that you have a regular income source. Steady employment will enable you to increase your savings and improve your overall financial circumstances, leading to a better credit rating.
- Increase your savings balance
Your savings account is an asset, so increasing your savings balance gradually will illustrate to loan providers that you are financially responsible and are capable of making loan repayments. By transferring money into a dedicated savings account each month, even a small amount, will improve your credit history.
- Limit your credit applications
Each time you make an application for a line of credit, it is recorded on your credit history, so too many credit applications can negatively impact your credit rating. After being discharged, it’s pivotal that you are realistic and cautious about the kinds of credit you apply for to increase your chances of approval. It’s best to apply for only 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.
- Consider a term deposit
If you’ve had the opportunity to save money during the course of your bankruptcy period, contemplate putting some of it into a term deposit account. Not only will you accumulate interest and enhance your overall financial position, it will likewise show lending institutions that you are financially dependable. As a result, your chances of obtaining 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 kind of repayment on time. Regardless of whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will evidently improve your credit report and increase the confidence that loan providers have in your financial management capabilities.
- Don’t hesitate to speak to financial institutions
If you intend to make an application for a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t hesitate to speak to lenders or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and provide suggestions on what options would work best for your personal situation.
Beware of credit repair agencies
There are lots of credit repair companies that will make all kinds of promises to improve your credit record. Whilst many 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 record. The Government’s MoneySmart website (https://www.moneysmart.gov.au/) advises discharged bankrupts to be “very careful” of these companies because they “may not always be able to do what they claim they can”.
If you’re in need of any help in rebuilding your credit report, or have any concerns with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Speak to Bankruptcy Wagga Wagga on 1300 818 575, or alternatively you can visit our website for further information: http://www.bankruptcy-waggawagga.com.au/