Congratulations! You’ve successfully fulfilled your 3 year period of bankruptcy and have been discharged, so what now? You’ve clearly taken the right steps to settle your financial challenges by declaring bankruptcy, and all your debts are well behind you now. Keep in mind though, there’s still a good deal of work required to get your finances back on track. The most challenging issue that discharged bankrupts confront is their capability to borrow money, and the main reason for this is their bad credit rating.

For the previous three years, you’ve had no debts to repay so your credit history has nothing to show besides a bankruptcy mark next to your name. There’s been no movement on your credit report, so an empty page will make banks and lenders reluctant in lending money to you solely because they can’t ascertain your repayment behaviours. Repairing your credit history 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?
Given that loan providers haven’t been able to assess your financial management skills for the last 3 years, you have to begin illustrating healthy financial habits. Here’s a list of ways in which you can do this

1. Steady employment
Obtaining regular and ongoing employment is an excellent way to improve your financial security and display to lenders that you have a regular source of income. Steady employment will enable 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 as time go on will illustrate to loan providers that you are financially sensible 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 history.

3. Limit your credit applications
Every time you apply for a line of credit, it is registered on your credit report, so too many credit applications can adversely affect your credit history. After being discharged, it’s essential that you are pragmatic and mindful about the types of credit you apply for to increase the likelihood of approval. It’s best to make an application for only one line of credit at once, and always remember 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 chance to save money throughout your bankruptcy period, think about putting some of it into a term deposit account. Not only will you accumulate interest and strengthen your overall financial circumstances, it will additionally show lending institutions that you are financially dependable. Subsequently, the likelihood of acquiring 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 of whether 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 loan providers have in your financial management skills.

6. Don’t be afraid to talk with loan providers
If you intend to request a line of credit after your bankruptcy period, or find out what types of options are available to you, don’t be reluctant to talk with lenders or other financial institutions to discuss 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 circumstances.

Beware of credit repair companies
There are a number of credit repair agencies that will make all sorts of promises to improve your credit report. Whilst many of them are helpful in challenging any incorrect listings on your credit record, 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 because they “may not always be able to do what they claim they can”.

If you’re in need of any support in repairing your credit history, or have any concerns concerning your recovery process after bankruptcy, it’s always best to seek advice from qualified professionals. Speak with Bankruptcy Experts Hervey Bay on 1300 795 575, or alternatively you can visit our website for more information: www.bankruptcyexpertsherveybay.com.au