Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so what now? You’ve certainly taken the right measures to settle your financial dilemmas by filing for bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still a lot of work involved to get your finances back in order. The most challenging issue that discharged bankrupts face is their capability to borrow money, and the reason for this is their poor credit rating.
For the last three years, you’ve had no debts to pay off so your credit history has nothing to show except for a bankruptcy mark next to your name. There’s been no movement on your credit report, so a blank page will make lending institutions reluctant in lending money to you purely because they can’t assess your repayment habits. Rebuilding your credit rating is the best way to get your finances back on track, and make your recovery process as smooth as possible.
How you can repair your credit report after discharge?
Due to the fact that loan providers haven’t been able to ascertain your financial management skills for the last three years, you need to start displaying healthy financial habits. Here’s a list of ways in which you can do this
- Steady employment
Achieving stable and ongoing employment is a terrific way to improve your financial security and demonstrate to financial institutions that you have a regular source of income. Stable employment will allow you to increase your savings and improve your overall financial condition, leading to a better credit rating.
- Increase your savings balance
Your savings account is an asset, so increasing your savings balance gradually will show lending institutions that you are financially reliable and are capable of making loan repayments. By transferring money into a specialised savings account every month, even a small amount, will improve your credit history.
- Limit your credit applications
Every time you request a line of credit, it is recorded on your credit report, so too many credit applications can negatively affect your credit history. After being discharged, it’s extremely important that you are sensible and cautious about the kinds 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 remember that secured loans and options with a guarantor or joint accounts will increase the probability of approval.
- Think about a term deposit
If you’ve managed to save money during the course of 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 lenders that you are financially reliable. Therefore, your chances of acquiring 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 type of repayment on time. Whether or not it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will undoubtedly improve your credit report and increase the confidence that lenders have in your financial management capabilities.
- Don’t be afraid to speak with loan providers
If you want to request a line of credit after your bankruptcy period, or explore what types of options are available to you, don’t be afraid to talk with banks or other financial institutions to review your circumstances. They are in the best position to advise of your eligibility, and give guidance on what options would work best for your individual situation.
Be careful with credit repair companies
There are lots of credit repair companies that will make all kinds of promises to improve your credit record. Although many of them are reliable in disbuting 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 firms because they “may not always be able to do what they claim they can”.
If you need any advice in repairing your credit history, or have any concerns regarding your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Talk with Bankruptcy Advice Perth on 1300 879 867, or alternatively you can visit our website for further information: Bankruptcy Perth