Ways to Rebuild Your Credit Rating After Bankruptcy?

Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so what now? You’ve obviously taken the most suitable actions to settle your financial dilemmas by filing for bankruptcy, and all your debts are well behind you now. Bear in mind though, there’s still plenty of work required to get your finances back in order. The biggest 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 3 years, you’ve had no debts to pay back so your credit history has nothing to show with the exception of a bankruptcy mark against your name. There’s been no movement on your credit report, so an empty page will make financial institutions reluctant in lending money to you simply because they can’t analyse your repayment habits. Repairing 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 repair your credit report after discharge?

Since lenders haven’t been able to assess your financial management skills for the last 3 years, you have to start illustrating healthy financial habits. Here’s a list of ways in which you can do this


  1. Steady employment

Attaining consistent and ongoing employment is an effective way to enhance your financial security and show lending institutions that you have a regular source of income. Stable employment will allow you to increase your savings and bolster your overall financial situation, resulting in a better credit rating.


  1. Increase your savings balance

Your savings account is an asset, so increasing your savings balance over time will display to lenders that you are financially responsible and are capable of making loan repayments. By putting money into a specialised savings account every month, even a small amount, will improve your credit history.


  1. Limit your credit applications

Every time you apply for a line of credit, it is documented 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 kinds of credit you apply for to increase the likelihood of approval. It’s best to request 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.


  1. Contemplate a term deposit

If you’ve had the opportunity to save money during your bankruptcy period, contemplate investing some of it into a term deposit account. Not only will you accrue interest and improve your overall financial position, it will likewise show financial institutions that you are financially reliable. As a result, your chances of obtaining a loan will be increased which leads to an improved credit rating.


  1. 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 certainly improve your credit rating and increase the confidence that financial institutions have in your financial management skills.


  1. Don’t hesitate to speak with lenders

If you wish to make an application for a line of credit after your bankruptcy period, or uncover what types of options are available to you, don’t hesitate to talk to lenders or other financial institutions to discuss your circumstances. They are in the best position to advise of your eligibility, and give advice on what options would work best for your individual circumstances.


Be mindful of credit repair companies

There are numerous credit repair agencies that will make all sorts of promises to improve your credit report. Although 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 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”.


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