Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so what now? You’ve obviously taken the appropriate steps to deal with your financial issues by declaring bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still a considerable amount of work involved to get your finances back in order. The most challenging issue that discharged bankrupts confront is their capability to borrow money, and the main reason for this is their poor credit rating.
For the previous 3 years, you’ve had no debts to pay off so your credit history has nothing to show other than 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 only because they can’t assess your repayment habits. Rebuilding your credit rating is the best way to get your finances back in order, and make your recovery process as smooth as possible.
How you can repair your credit report after discharge?
Since loan providers haven’t been able to review your financial management skills for the last 3 years, you need to start demonstrating healthy financial habits. Here’s a list of ways in which you can do this
1. Reliable employment
Achieving regular and ongoing employment is a great way to boost your financial security and show lenders that you have a regular income stream. Stable employment will allow you to increase your savings and strengthen your overall financial situation, leading to a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance over time will display to financial institutions that you are financially responsible 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 apply for a line of credit, it is marked on your credit report, so lots of credit applications can adversely affect your credit rating. After being discharged, it’s essential 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 a single line of credit at once, and keep 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 capacity to save money during the course of your bankruptcy period, contemplate investing some of it into a term deposit account. Not only will you accrue interest and boost your overall financial circumstances, it will additionally show loan providers that you are financially reliable. Therefore, 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 kind of repayment on time. Whether it’s your electricity, rent, or even a secured loan in your name, making these repayments on time will undoubtedly improve your credit history and increase the confidence that lenders 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 afraid to talk with 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.
Be careful with credit repair companies
There are numerous credit repair companies that will make all kinds of promises to improve your credit report. Even though some of them are helpful in challenging any incorrect listings on your credit history, 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 due to the fact that they “may not always be able to do what they claim they can”.
If you need any assistance in rebuilding your credit report, or have any inquiries with respect to your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Speak with Bankruptcy Experts Darwin on 1300 795 575, or alternatively you can visit our website for more information: www.bankruptcyexpertsdarwin.com.au