Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so now what? You’ve undoubtedly taken the appropriate steps to resolve your financial problems by declaring bankruptcy, and all your debts are well behind you now. Despite this, there’s still a considerable amount of work required to get your finances back in order. The most challenging issue that discharged bankrupts experience is their ability to borrow money, and the main reason for this is their bad credit rating.
For the past three years, you’ve had no debts to repay 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 lenders hesitant in lending money to you purely because they can’t inspect your repayment habits. Rebuilding your credit history is the best way to get your finances back on course, and make your recovery process as seamless as possible.
The best ways to rebuild your credit report after discharge?
Due to the fact that lending institutions haven’t been able to assess your financial management skills for the past 3 years, you will need to begin presenting healthy financial habits. Here’s a list of ways in which you can do this
1. Steady employment
Achieving stable and ongoing employment is a terrific way to boost your financial security and demonstrate to banks and financial institutions that you have a regular income source. Stable employment will allow you to increase your savings and enhance your overall financial circumstances, leading to a better credit rating.
2. Increase your savings balance
Your savings account is an asset, so increasing your savings balance as time go on will illustrate to lending institutions that you are financially sensible and are capable of making loan repayments. By transferring money into a dedicated savings account every 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 report, so excessive credit applications can adversely impact your credit history. After being discharged, it’s integral that you are practical and careful about the kinds of credit you apply for to increase the likelihood of approval. It’s best to make an application for just one line of credit at a time, and always remember that secured loans and options with a guarantor or joint accounts will increase the chances of approval.
4. Think about a term deposit
If you’ve been able to save money during your bankruptcy period, contemplate investing some of it into a term deposit account. Not only will you accumulate interest and enhance your overall financial situation, it will likewise show lending institutions that you are financially dependable. Therefore, the likelihood of securing 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. Whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will certainly improve your credit report and increase the confidence that lending institutions have in your financial management capabilities.
6. Don’t be afraid to speak to lending institutions
If you intend to request a line of credit after your bankruptcy period, or discover what types of options are available to you, don’t hesitate to talk to lenders or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and give insight on what options would work best for your individual circumstances.
Be cautious of credit repair firms
There are lots of credit repair firms that will make all sorts of promises to improve your credit record. Whilst some of them are effective 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 agencies since they “may not always be able to do what they claim they can”.
If you require any assistance in rebuilding your credit report, or have any inquiries regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Talk to Bankruptcy Experts Kalgoorlie on 1300 795 575, or alternatively you can visit our website for more information: Bankruptcy Kalgoorlie