If you've declared bankruptcy or are a discharged bankrupt, there are some steps you can take to improve your credit history. Bankruptcy remains on your credit report for up to seven years, so you can set short and long-term goals to get your finances back in order. If you've been discharged from bankruptcy, whether you can apply for a credit card will depend on your credit score and other factors.
From growing your savings to improving your repayment behaviour, you can use this guide to discover how you can improve your credit during and after your bankruptcy.
How to repair your credit after bankruptcy
By following the positive financial steps below, you can start to improve your credit position after bankruptcy:
Work on your employment circumstances. The financial security that comes from having stable employment can improve your credit rating and shows lenders that you have a regular source of income. A permanent or ongoing job will also help your overall financial circumstances, so it is a great first step to take.
Grow your savings. Savings can demonstrate to lenders that you have the ability to financially manage your finances. Start by regularly putting money aside, even if it is just a small amount that you transfer to a dedicated savings account. You can also use finder's guide to budgeting to get started.
Consider getting a term deposit. If you have a lump sum of money you can put into a term deposit account, you may be able to use it to get a secure loan that will help re-establish your credit accounts. You can learn how they work and compare our options in finder's comprehensive guide to term deposits.
Limit your credit applications. Too many credit applications can negatively affect your credit history. Even if you've been discharged from bankruptcy, it’s important to be selective about the types of credit you apply for to increase your chances of approval. If possible, only apply for one product at a time and look for options that are likely to be approved, such as secured loans, options with a guarantor or joint accounts. You should also wait until you've built up your credit score before you apply for any lines of credit. Otherwise, any rejected applications could further hurt your credit score.
Make payments on time. Whether you have a secured loan or an electricity account in your name, paying the balance on time will help you build up good credit history after bankruptcy.
Talk to issuers. If you want to apply for a particular product after bankruptcy or learn what options are available, consider contacting banks and other lenders to discuss your situation. They will be able to advise you on your eligibility and answer any specific questions that you have to help you find options that will work for you.
The credit repair process takes time, but each positive behaviour will have a good impact on your credit file. You can check out finder's guide to credit repair for more tips.
Is it worth contacting a credit repair agency after bankruptcy?
If you've found any incorrect negative listings or black marks on your file, you can enlist the help of a professional credit repair agency to have those listings removed. However, these credit repair agencies may be able to do little for you after bankruptcy.
In fact, the government’s MoneySmart website warns people to be wary of these companies as they “may not always be able to do what they claim”. So if you are interested in getting a credit repair agency to help you improve your credit file, make sure you compare different options and research their services so that you know exactly what you are paying for.
What types of credit cards can I get after bankruptcy?
You'll need to have a good credit score to apply and be approved for a credit card in Australia. This means that you're unlikely to be eligible for a credit card shortly after being discharged from bankruptcy. If you've been following the steps above and improving your credit score, there are some credit cards that could suit you:
Credit cards with low minimum income requirements. These cards have low minimum annual income requirements of around $15,000 to $25,000 per year. They usually offer features such as low interest rates, competitive annual fees and sometimes 0% balance transfer offers. If used properly and paid in full each statement period, these cards could help you build up your credit history without high costs.
Low credit limit cards. These cards have low maximum credit limits, which can help you keep your spending under control. When you apply for a credit card, you should request a realistic credit limit and make sure you stick to a budget to avoid overspending. Again, paying off your balance in full each statement is ideal and will help you avoid interest costs.
Joint account credit cards. You can apply for some credit cards with another person, which means both your credit histories will be assessed for the application and you will share responsibility for the account. If the other applicant has a good credit history, it can increase your chances of the credit card being approved so that you can start building up a good credit score.
You should only apply for a card when you are confident you’ll meet the eligibility requirements and can manage the account responsibly. Bankruptcy can remain on your credit report for seven years, so you may want to contact the bank before you apply to discuss the likelihood of your approval.
Make sure to compare your options and consider contacting the card issuer before applying to discuss your likelihood of approval before applying.
Compare low credit limit credit cards
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If you've filed for bankruptcy, there are a few different strategies you can consider to get your finances back on track. Build up your savings and pay your accounts on time. If you've been discharged from bankruptcy, you should only apply for a credit card or other credit products once you've taken the time to improve your score.
Once you get out of bankruptcy, it’s important to learn how to manage your new spending habits and handle your finances carefully. In this guide to bankruptcy and credit score, you can find more tips to improving your finances after declaring personal bankruptcy.
Bankruptcy details are listed on your credit file for two years from the discharge or annulment date or five years from the beginning of the bankruptcy – whichever comes later. As a result it should have been removed from your credit file now.
Yes, but the details of your bankruptcy will still be on your credit file, which could affect your ability to get approved for a credit card or loan at this time. You may want to focus on improving your credit history to increase the chances of getting your application approved in the future.
Jeremy Cabral is the chief operating officer and global head of publishing for Finder. He has written hundreds of comparisons covering everything from credit cards to travel money to Netflix TV shows. Jeremy has a Bachelor of Business (Marketing) from the University of Western Sydney. See full bio
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My question is. Just wondering if it is possible to negotiate to re-pay my debt now I have a secure and full time employment is this possible and would this action clear the slate.
Just to confirm, have you declared bankruptcy before? If so, careful planning to repair your credit and financial health is indeed important. Repaying your previous debts is just one of the ways to start the repair. You may like to read our article about financially recovering after bankruptcy., You should find useful tips in that article.
Hi
I had a bad debt from a couple of service provider due to my financial situation back in 2011 and I’m willing to repay them but I was wondering even if I repay them, will the record still be on the file to apply for the loan from the bank to start up my own business? Any advice and suggestion would be appreciated.
Most lenders will check your credit file when you apply for a new line of credit, say you apply for a loan for your business. Therefore, it is wise and important that you keep your credit file healthy and in good standing to be assured of approval for your loan application. Since you have mentioned that you have had a bad credit history, it’d be best if you settle your previous debt first by making on-time repayments.
Keep in mind that your credit file will hold your repayment history information for 2 years. Credit enquiries, overdue accounts as clearouts and defaults, and also court judgments remain on your file for five years. Meanwhile, overdue accounts listed as serious credit infringements remain on your file for seven years.
Once you get out of bankruptcy, you’d be best if you learn how to manage your new spending habits and handle your finances carefully. Our Credit Repair After Bankruptcy provides invaluable information and tips on getting your life back again after dealing and declaring personal bankruptcy.
If your debt is significant, there is no stopping a card issuer from initiating proceedings to repossess some of your assets or even push you towards bankruptcy. You may like to consider transferring your existing credit card debt to a balance transfer credit card and repay your debt with 0% interest.
Hi there, was discharged from bankruptcy on 26/3/2014. does that mean that after the 26/3/16 bankruptcy will be off m,y credit report? i am looking to re finance home loan for better rate with mainstream lender (bank) will i have a better chance then.
The bankruptcy listing remains on your credit file for two years from the annulment date, or five years from the beginning of the bankruptcy – whichever comes later. You may like to refer to our guide on improving your credit score.
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Hello
My question is. Just wondering if it is possible to negotiate to re-pay my debt now I have a secure and full time employment is this possible and would this action clear the slate.
Hi Jim,
Thanks for your comment.
Just to confirm, have you declared bankruptcy before? If so, careful planning to repair your credit and financial health is indeed important. Repaying your previous debts is just one of the ways to start the repair. You may like to read our article about financially recovering after bankruptcy., You should find useful tips in that article.
Cheers,
May
Hi
I had a bad debt from a couple of service provider due to my financial situation back in 2011 and I’m willing to repay them but I was wondering even if I repay them, will the record still be on the file to apply for the loan from the bank to start up my own business? Any advice and suggestion would be appreciated.
Many thanks.
Hi Roni,
Thanks for reaching out.
Most lenders will check your credit file when you apply for a new line of credit, say you apply for a loan for your business. Therefore, it is wise and important that you keep your credit file healthy and in good standing to be assured of approval for your loan application. Since you have mentioned that you have had a bad credit history, it’d be best if you settle your previous debt first by making on-time repayments.
Keep in mind that your credit file will hold your repayment history information for 2 years. Credit enquiries, overdue accounts as clearouts and defaults, and also court judgments remain on your file for five years. Meanwhile, overdue accounts listed as serious credit infringements remain on your file for seven years.
Cheers,
May
I went bankrupt about 8 years ago, I just wanted to be able to get a loan. How do I get back on my feet with this or it is not possible ever again?
Hi Joe,
Thanks for getting in touch.
Once you get out of bankruptcy, you’d be best if you learn how to manage your new spending habits and handle your finances carefully. Our Credit Repair After Bankruptcy provides invaluable information and tips on getting your life back again after dealing and declaring personal bankruptcy.
I hope this is helpful.
Cheers,
May
If I have a credit card debt that I cannot pay can they take my car of me ? it is 6 years old and I owe it out right.
Many thanks.
Hi Jeannie,
Thanks for your inquiry!
If your debt is significant, there is no stopping a card issuer from initiating proceedings to repossess some of your assets or even push you towards bankruptcy. You may like to consider transferring your existing credit card debt to a balance transfer credit card and repay your debt with 0% interest.
Cheers,
Jonathan
Hi there, was discharged from bankruptcy on 26/3/2014. does that mean that after the 26/3/16 bankruptcy will be off m,y credit report? i am looking to re finance home loan for better rate with mainstream lender (bank) will i have a better chance then.
Hi Steve,
Thank for your inquiry!
The bankruptcy listing remains on your credit file for two years from the annulment date, or five years from the beginning of the bankruptcy – whichever comes later. You may like to refer to our guide on improving your credit score.
Cheers,
Jonathan