Congratulations! You’ve successfully served your 3 year period of bankruptcy and have been discharged, so now what? You’ve clearly taken the appropriate steps to address your financial challenges by filing for bankruptcy, and all your debts are well behind you now. Despite this, there’s still a good deal of work required to get your finances back on track. The leading issue that discharged bankrupts confront is their capability to borrow money, and the main reason for this is their poor credit rating.
For the past 3 years, you’ve had no debts to repay so your credit history has nothing to show with the exception of a bankruptcy mark next to your name. There’s been no activity on your credit report, so an empty page will make financial institutions reluctant in lending money to you purely because they can’t ascertain your repayment habits. Repairing your credit rating is the best way to get your finances back on track, and make your recovery process as smooth as possible.
Ways to repair your credit report after discharge?
Since loan providers haven’t been able to assess your financial management skills for the previous 3 years, you have to begin exhibiting healthy financial habits. Here’s a list of ways in which you can do this
1. Stable employment
Acquiring stable and ongoing employment is a terrific way to improve your financial security and demonstrate to financial institutions that you have a regular income source. Reliable employment will allow 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 gradually will display to lenders that you are financially responsible 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.
3. Limit your credit applications
Each time you request a line of credit, it is recorded on your credit history, so excessive credit applications can adversely impact your credit rating. After being discharged, it’s extremely important that you are pragmatic and careful about the kinds of credit you apply for to increase the likelihood of approval. It’s best to make an application for a single line of credit at once, and remember that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.
4. Think about a term deposit
If you’ve had the chance to save money throughout your bankruptcy period, contemplate investing some of it into a term deposit account. Not only will you accrue interest and strengthen your overall financial circumstances, it will additionally show financial institutions that you are financially responsible. Subsequently, the likelihood 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. Regardless if 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 financial institutions have in your financial management abilities.
6. Don’t be afraid to talk to loan providers
If you intend to apply for a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t be reluctant to talk to banks or other financial institutions to discuss your situation. They are in the best position to advise of your eligibility, and offer recommendations on what options would work best for your personal situation.
Be careful with credit repair firms
There are numerous credit repair firms that will make all kinds of promises to improve your credit report. Even though some of them are reliable 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 firms because they “may not always be able to do what they claim they can”.
If you need any support in repairing your credit report, or have any inquiries concerning your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Talk with Bankruptcy Experts Coffs Harbour on 1300 795 575, or alternatively you can visit our website for more information: www.bankruptcyexpertscoffsharbour.com.au