Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so what now? You’ve obviously taken the right actions to address your financial dilemmas by declaring bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still a lot of work required to get your finances back on track. The most significant issue that discharged bankrupts experience is their opportunity to borrow money, and the reason for this is their bad credit rating.
For the past 3 years, you’ve had no debts to pay off so your credit history has nothing to show with the exception of 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 solely because they can’t evaluate your repayment habits. 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?
Considering that financial institutions haven’t been able to check your financial management skills for the past 3 years, you will want to start demonstrating healthy financial habits. Here’s a list of ways in which you can do this
1. Regular employment
Achieving regular and ongoing employment is a fantastic way to enhance your financial security and demonstrate to loan providers that you have a regular source of income. Reliable employment will allow you to increase your savings and strengthen your overall financial condition, resulting in a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance gradually will show lenders that you are financially reliable and are capable of making loan repayments. By putting money into a specialised savings account each month, even a small amount, will improve your credit rating.
3. 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 realistic and mindful about the types 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 probability of approval.
4. Think about a term deposit
If you’ve had the opportunity to save money during your bankruptcy period, contemplate investing part of it into a term deposit account. Not only will you accumulate interest and boost your overall financial situation, it will also show loan providers that you are financially responsible. As a result, 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 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 undoubtedly improve your credit history and increase the confidence that loan providers have in your financial management abilities.
6. Don’t hesitate to talk to lending institutions
If you want to apply for 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 situation. They are in the best position to advise of your eligibility, and give recommendations on what options would work best for your personal situation.
Be cautious of credit repair companies
There are numerous credit repair companies 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 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 firms since they “may not always be able to do what they claim they can”.
If you need any help in rebuilding your credit history, or have any questions with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Phone Bankruptcy Experts Maitland on 1300 795 575, or alternatively you can visit our website for further information: www.bankruptcyexpertsmaitland.com.au