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Access to credit - impact of bankruptcy

This advice applies to Wales

If you've been declared bankrupt, it will severely affect your credit rating. This could mean you find it more difficult to get credit in the future. It's important to make sure you understand the impact this could have on your day-to-day life before you apply to go bankrupt.

This page explains how going bankrupt could affect your future access to credit.

Bankruptcy explained

If you want more information about what bankruptcy is and how it works, see Bankruptcy - what you need to know.

What is your credit rating?

When you apply for a loan or other type of credit, the lender has to decide whether or not to lend to you. Creditors use different things to help them decide whether or not you are a good risk, including a credit rating they work out from your credit reference file.

Your credit reference file is held by the three credit reference agencies and contains information about you, including how you've managed existing bank accounts and credit commitments, whether you've had your home repossessed and people you're financially linked to. When you apply for credit, the credit provider will search your credit reference file to see how much of a risk it is to lend to you.

More about your credit rating

Will bankruptcy show up on your credit file?

Your bankruptcy will show up on your credit reference file. This would reduce your chances of getting credit if you applied for it, as it would show you've struggled to keep up repayments.

The note will stay on your file for six years from when you become bankrupt, meaning it could be some time before you can get credit in the future. This could make running a business, getting a mortgage, finding a new tenancy or getting any other form of credit extremely difficult for several years.

You might also struggle to open a new bank account after you're declared bankrupt and for some time after you've been discharged from bankruptcy.

While you're bankrupt, you're not allowed to get credit for £500 or more, without telling the creditor about your bankruptcy. Doing this would be committing a criminal offence. You could be fined or even sent to prison. If a bankruptcy restrictions order (BRO) is made against you, this rule will also apply as long as the BRO is in force.

If you're unhappy with how bankruptcy might affect your credit rating, you might want to consider a different debt solution.

How can you check your credit file?

You can check what information the credit reference agencies are holding about you and change any incorrect information. To do this you need to ask to see your credit reference file from any of the main credit reference agencies.

Next steps

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