How does bankruptcy impact your credit rating?
Your bankruptcy will be visible on your credit report and during bankruptcy it will be very difficult to obtain credit. Before you are discharged from bankruptcy, it is an offence to apply for credit of £500 or more without declaring it to the lender.
Bankruptcy will stay on your credit report for six years, or longer should the bankruptcy be extended for any reason. After this period, it will no longer be listed on your credit file, so you will be able to start building up your credit rating again. Bear in mind that some lenders may still ask if you have ever been made bankrupt, and you must answer truthfully, even if the bankruptcy is no longer visible on your file.
We would recommend that you wait until your bankruptcy has been completely removed from your file before applying for more credit. This is because lenders will be unlikely to approve you whilst you are listed as bankrupt, and if you have been refused credit, this will have a further negative impact on your credit rating.
Before you apply for bankruptcy, it’s a good idea to consider how the ongoing impact on your credit file may affect you, your family and possibly even your employment. There are a number of alternative debt solutions that may be better for you (such as an IVA or a DMP) so it would be worth looking into these first.