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How Are Credit Ratings Affected by Bankruptcy?

01 February 2019 - Posted by TalkAboutDebt

Bankruptcy can have a serious impact on your credit ratings. Therefore it is crucial you think carefully about going bankrupt and consider other options too. This article explains how bankruptcy can affect your credit ratings.

 

How long is your credit rating during bankruptcy?

 

The fact that you have been declared bankrupt will remain on your credit history for up to six years following the discharge. After that, it is down to the individual credit provider’s policy as to whether they will lend to discharged bankrupts.

If you declare yourself bankrupt today the bankruptcy order will shortly be recorded on your credit file. The creditors will also usually issue default notices. Usually, in a years time, you will be discharged from bankruptcy and you can have the order marked as satisfied. You can then start rebuilding your credit rating.6 years after the bankruptcy order was made it should drop off your credit file.

 

How does being bankrupt affect credit?

 

Bankruptcy has a serious effect on your ability to get credit. In fact, there is an offence of obtaining credit of more than £500 while bankrupt without disclosing that you are bankrupt.

 

How can I improve my credit rating after bankruptcy?

 

It will usually be expensive to start with but after a couple of years of using credit responsibly, you should be able to get reasonable rates. Credit rating depends on other factors such as your employment, the electoral role your address etc. For more information on improving your credit ratings, please see our article on how to improve your credit ratings.

 

Will my partner’s credit be affected?

 

Your partner’s personal credit file is the history of how they have managed their financial commitments over the past 6 years and your bankruptcy is not part of their file. There are times when it can cause an issue and this is usually because there is a direct question on a form. If your partner ever has to fill in a form that asks if someone else in the household is a bankrupt. They may need to speak to a mortgage expert to see if, and how, this may affect a mortgage application. You might want to read our post on what affects your credit ratings for more details.

 

Need more help?

If you need more information on credit ratings and bankruptcy. There is an FAQ on the government insolvency service website. This is also a leaflet about credit ratings.

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