Will my bankruptcy affect my credit score?

What happens to an individual’s credit score once they are made bankrupt.

What is your credit score?

An individual’s credit score, also known as their credit rating, is a three-digit number that reflects how reliable an individual is at repaying money. The higher the score, the better chance an individual will receive in obtaining credit, such as a loan or mortgage, and at the best rates.

Will my bankruptcy show up on my credit file?

The short answer is yes. This is because it is an important and significant factor that lenders would need to know about when determining whether to provide credit or not, and at what rate. It is evidence that an individual has defaulted on payments in the past and, therefore, is more likely to default in the future. In other words, it may make the lending more risky to the lender.

How long will the details of my bankruptcy stay on my credit file?

The note of a person’s bankruptcy will stay on their credit file for a period of six years after an individual becomes bankrupt, regardless of whether the bankruptcy has been discharged or not. This will make obtaining credit extremely difficult for a significant period and may affect a person’s ability to obtain a mortgage, run a business, or even enter into a tenancy agreement.

Can I still obtain credit?

In theory, a person who has been made bankrupt could still obtain credit but, for the reasons set above, it may be more difficult and the rates offered may be higher. Further, you need to declare your bankruptcy to anyone who is offering £500 or more of credit while you are bankrupt. If you are subject to a Bankruptcy Restrictions Order, you will need to comply with this rule so long as the order is in place. If you fail to do so, you could be fined or even sent to prison.

That said, there are still some lenders out there who may offer credit, especially if they are provided with security, such as a personal guarantee from a third party.

How can I check my credit file?

You should contact any of the main credit reference agencies who will be able to provide details of your credit score. This can also be done online in some cases.

How Gherson can assist

Gherson’s litigation team has considerable experience in advising on these matters. If you have a potential claim, or are a defendant to an action, then please do not hesitate to contact us for advice, send us an e-mail, or alternatively, follow us on Twitter, Facebook, or LinkedIn to stay-up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

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