Tips on how to Rebuild Your Credit Rating After Bankruptcy?

Congratulations! You’ve successfully fulfilled your three year period of bankruptcy and have been discharged, so now what? You’ve certainly taken the most suitable steps to address your financial challenges by declaring 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 experience is their capability to borrow money, and the reason for this is their bad credit rating.

For the past three years, you’ve had no debts to pay off 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 a blank page will make financial institutions reluctant in lending money to you solely because they can’t inspect your repayment behaviours. 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?

Given that lending institutions haven’t been able to inspect your financial management skills for the previous three years, you will need to begin illustrating healthy financial habits. Here’s a list of ways in which you can do this

  1. Stable employment

Obtaining steady and ongoing employment is an excellent way to improve your financial security and show lenders that you have a regular source of income. Steady employment will enable you to increase your savings and enhance your overall financial circumstances, 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 illustrate to loan providers that you are financially sensible and are capable of making loan repayments. By putting money into a dedicated savings account each month, even a small amount, will improve your credit rating.

  1. Limit your credit applications

Each time you make an application for a line of credit, it is recorded on your credit history, so excessive credit applications can negatively impact your credit history. After being discharged, it’s crucial that you are sensible and cautious about the types of credit you apply for to increase the likelihood of approval. It’s best to request a single line of credit at once, and remember that secured loans and options with a guarantor or joint accounts will increase the likelihood of approval.

  1. Contemplate a term deposit

If you’ve had the capacity to save money throughout your bankruptcy period, think about putting some of it into a term deposit account. Not only will you accrue interest and boost your overall financial circumstances, it will likewise show financial institutions that you are financially reliable. Subsequently, your chances of securing 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 of whether it’s your rent, electricity, or even a secured loan in your name, making these repayments on time will most certainly improve your credit rating and increase the confidence that lending institutions have in your financial management abilities.

  1. Don’t be afraid to talk to lending institutions

If you intend to make an application for 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 review your circumstances. They are in the best position to advise of your eligibility, and offer information on what options would work best for your individual circumstances.

Beware of credit repair firms

There are loads of credit repair firms that will make all kinds of promises to improve your credit record. Even though many of them are effective 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 ( 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 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. Get in touch with Bankruptcy Experts Australia on 1300 795 575, or alternatively you can visit our website for more information: Bankrupt Australia

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