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Credit Rating and Bankruptcy

Credit Rating and Bankruptcy

Credit Rating and Bankruptcy

Bankruptcy will have a negative impact on your Credit Rating. However the effect is no worse than if you were to use a Debt Management Plan or IVA.

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How Bankruptcy will affect your Credit Rating

Your credit rating will be affected if you go Bankrupt. A record of your Bankruptcy be recorded on your credit file. How long will the record remain on your file? To find out more about how Bankruptcy will affect your credit rating please visit:

How long will your Credit Rating be affected?

Bankruptcy is recorded on your credit file. The record remains for 6 years from the date you were made bankrupt. The record will show up if anyone carries out a credit check against you.

As a result your credit rating becomes poor. During this time if you apply for any new credit your request will usually be rejected.

The length of your bankruptcy will normally be 12 months. After this time you will be automatically discharged. However your credit rating will continue to be poor because the record will not be taken off your file until six years have passed.

After you are discharged there are various things you can do to start improving your credit rating. This is even before the record comes off your credit file.

Does Bankruptcy affect your Credit Rating more than other debt solutions?

You may think that Bankruptcy will have a worse affect on your credit rating than alternative debt solutions such as an IVA. This is not the case.

If you start a Debt Management Plan (DMP) the fact that you are paying reduced payments each month is recorded on your credit file. This will have the same affect as bankruptcy on your credit rating.

An IVA is also recorded on your credit file for 6 years from the date it starts. Again the result will be the same as bankruptcy. You will struggle to get credit until the Arrangement is over.

Arguably bankruptcy will affect your credit rating for less time than other debt solutions. Because it only lasts 12 months you can start repairing your credit file sooner than a DMP or IVA.

Which Credit Facilities can you use while Bankrupt?

After you go bankrupt there are various forms of credit that you can continue to use. If you have a mobile phone on contract this will not be affected. You will be able to continue paying the monthly amounts.

In addition you will be allowed to continue paying your car insurance on a monthly basis. The only thing to consider here is renewing your insurance. You may only be able to retain the ability to pay monthly with the same insurer.

You may still be accepted for a payday loan while you are bankrupt. Payday loans companies do not use the same lending criteria as other high street lenders. However it is not advisable to borrow more money until you are discharged.

Bankruptcy will not affect your utility accounts such as gas and electricity. If you have arrears these debts can be included. The provider should then reset your account and you continue paying as normal.

Getting a Mortgage after Bankruptcy

Contrary to what you might have heard you can get a mortgage after bankruptcy. There are a number of lenders who will consider your application.

The amount you will be able to borrow will depend on two key criteria. How long it is since your bankruptcy started and the amount you can put down as a deposit.

You will need to use a adverse lender. These are lenders who are prepared to give you a mortgage despite you being a higher perceived risk. However in return they generally charge a higher rate of interest than High Street lenders.

If your previous property was repossessed and the shortfall was written off in your bankruptcy you will have to wait for 6 years from the date of the repossession before applying for a new mortgage.

Want to get a mortgage after bankruptcy. Give us a call (0800 077 6180) or complete the form below to speak to one of our experts.

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