Bankruptcy and your credit score

When you’re declared bankrupt, it gets noted on your credit file. You’ll likely see an immediate drop in your score. This will make it much harder for you to borrow from mainstream lenders.

Bankruptcy stays on your credit report for six years, even though most bankruptcies last just 12 months. 

During this time, lenders will see it when they check your history. This will make it hard to get credit such as loans, credit cards and mortgages because you’ll be viewed as a risky prospect due to your previous financial difficulties.

When applying for certain types of credit, some lenders routinely ask if you’ve ever been declared bankrupt. This means you may find having been declared bankrupt affects your ability to borrow, even after the bankruptcy no longer shows on your credit file. This is particularly common when it comes to mortgages.

During your bankruptcy, if the official receiver decides you've acted carelessly or dishonestly, they might set up a bankruptcy restriction undertaking (BRU) or a bankruptcy restriction order (BRO).

These can increase your bankruptcy restrictions for up to 15 years and these markers will stay on your credit file for just as long, further harming your ability to borrow.

Until the bankruptcy marker falls off your credit file, it’ll be hard to improve your score. But once it does, there are things you can do that will make a significant difference.

Check your credit reports

Make sure you do this at each of the three big credit reference agencies - Experian, Equifax and TransUnion. If a debt included in your bankruptcy is still showing on your credit file after six years, it’s usually because a creditor has used the wrong default date (they should be no later than the start of your bankruptcy) or they haven’t marked a debt as satisfied. If this is the case, ask the creditor concerned to correct this information.  

Also look for areas in your credit file where you can improve e.g. if there are any overdue debt payments that weren’t included in your bankruptcy, catch up as quickly as possible.

Get good markers on your credit file 

Make sure you’re on the electoral roll and all your personal details are correct. Then take care to pay all your bills on time and in full. Over time, this will help to repair your credit score.

Be careful with credit applications 

Making too many credit applications in a relatively short space of time can hurt your credit score.

Consider a ‘bad credit card’

This kind of card can help improve your credit score but only if you use it every month and repay it in full every month. Interest rates on these cards are high so unless you repay your full balance every month, getting one will be counterproductive.

Save with LOQBOX 

Make regular savings with LOQBOX and they’ll record your deposits as loan repayments, helping improve your credit score. This is a handy way to build up an emergency savings pot too.