How exactly does Bankruptcy affect your credit rating?

watcher27

Hi,
I was declared bankrupt in January, but prior to this, and up until the moment of bankruptcy, I had a perfect credit score!

I've had countless things on finance, loans, mobiles & my mortgage etc and all the loans paid off and have never missed a payment on anything EVER.

The first time I stopped making payments was in january, the month of bankruptcy.

So my question is, would all of this 13 years of perfect history have gotten wiped from my credit file? and if not, will it hold any value after the bankruptcy?

alastairq

So my question is, would all of this 13 years of perfect history have gotten wiped from my credit file? and if not, will it hold any value after the bankruptcy?

yes , it does......and no, it doesn't!

Sorry!

watcher27

Ok, So as of the moment of Bankruptcy, they wipe your file?
But then how come people have to then write to the agencies and get defaulted loans etc removed?

Sorry, just trying to get my head round it all

MoneySaverLog

They don't wipe your file, it stays for 6 years. Also if as a result of the BR you defaulted on any of these accounts the D marker will get added soon enough to them anyway.

The BR marker though would negate all the positive data. That BR marker stays there for 6 years.

debtinfo

watcher27 wrote: »

Hi,
I was declared bankrupt in January, but prior to this, and up until the moment of bankruptcy, I had a perfect credit score!

Hence why your credit score is not really a good indication of whether you should lend to someone

fermi

The bankruptcy order on your file renders previous positive data irrelevant. Plus account that were OK but covered by the bankruptcy will change to a default.

By the time the bankruptcy order comes off your file in 6 years, any previous positive data that survived would also be long gone.

So basically the BR is a big reset.

- Until the BR itself comes off your record will be bad no matter what.
- Until it does you can build some positive info post BR, but it will have little effect until the BR itself comes off.
- Once the BR does come off, then any positive data post BR should then help your file.

So basically do everything you reasonably can to improve your file in the next 6 years, knowing that when the BR eventually comes off those positives will help.

watcher27

debtinfo wrote: »

Hence why your credit score is not really a good indication of whether you should lend to someone

Exactly!

If id applied for a £25000 loan the day before I was declared bankrupt I would have got it :rotfl:

Just looking at my credit score, the lender would have been completely unaware what serious trouble I was in, and that my mortgage payments were about to double! :eek:

watcher27

fermi wrote: »

The bankruptcy order on your file renders previous positive data irrelevant. Plus account that were OK but covered by the bankruptcy will change to a default.

By the time the bankruptcy order comes off your file in 6 years, any previous positive data that survived would also be long gone.

So basically the BR is a big reset.

- Until the BR itself comes off your record will be bad no matter what.
- Until it does you can build some positive info post BR, but it will have little effect until the BR itself comes off.
- Once the BR does come off, then any positive data post BR should then help your file.

So basically do everything you reasonably can to improve your file in the next 6 years, knowing that when the BR eventually comes off those positives will help.

Thanks

My wife and I both currently have pay monthly mobile phones, and last month my wifes insurance company renewed the car insurance on a pay monthly policy, so would these be helping to improve our score?

PippaGirl_2

Ferni already said that nothing like that will improve your score while your BR is on the file, but those things will improve it once the BR disappears.

fermi

watcher27 wrote: »

Thanks

My wife and I both currently have pay monthly mobile phones, and last month my wifes insurance company renewed the car insurance on a pay monthly policy, so would these be helping to improve our score?

Negligible while the BR is on file, but they will be helping to build up a modest history for when the BR drops off.

The important thing is not to have a blank file when the BR and defaults drop off. A blank or "thin" file is not appealing to lenders either. A modest history of borrowing and paying back is what is ideal.

Bravehearted_2

watcher27 wrote: »

Exactly!

If id applied for a £25000 loan the day before I was declared bankrupt I would have got it :rotfl:

Just looking at my credit score, the lender would have been completely unaware what serious trouble I was in, and that my mortgage payments were about to double! :eek:

Erm, not really.

A simple credit check can show how much debt you currently have - and unless you lie on your loan application you most likely need to be earning over £50000 + amount of all debt to be given a 25k loan.

The fact that you were making minimum payment on your many many many credit accounts doesnt mean thats a good thing.

Lenders can tell when you're credit stretched.