This article is for general information and guidance only. It is not financial advice and should not be relied on as a personal recommendation. If you are unsure whether a financial product is right for you, you should seek independent financial advice.
Being declared bankrupt may make it harder to borrow money. It may also affect your credit score for several years.
The good news is that bankruptcy does not last forever. Over time, you may be able to rebuild your credit history by showing that you can manage your money and make payments on time.
There is no guaranteed way to improve your credit score quickly. However, there are steps that may help over time.
In this guide, we’ll explain how to rebuild your credit score after bankruptcy, including:
- What happens to your credit score after bankruptcy
- Steps that may help you rebuild your credit history
- How long it may take
- Whether you may be able to get a loan after bankruptcy
- Things to consider before applying for credit
What happens to your credit score after bankruptcy?
Bankruptcy is recorded on your credit file. Your credit file is a record of how you have managed credit in the past. Lenders will review it when you apply to borrow money.
A bankruptcy record may stay on your credit file for six years from the date the bankruptcy order was made.
During this time, some lenders may decide not to offer credit. Others may still consider your application, depending on their lending criteria.
When the six years have passed, the bankruptcy record may be removed from your credit file. This does not automatically mean your credit score will improve or that you will qualify for credit.
Guidance that may help you rebuild your credit score after bankruptcy
Rebuilding your credit score takes time. There is no single step that guarantees a better credit score. However, the following actions may help build a stronger credit history.
Check your credit report
A credit report contains information about your borrowing history. It may be useful to check that all the information is correct.
Look out for:
- Incorrect personal details
- Accounts that do not belong to you
- Bankruptcy information that is not accurate
If you find a mistake, you may be able to ask the credit reference agency to investigate it.
Pay your bills on time
Paying bills on time may help show that you can manage regular payments.
This includes things like:
- Utility bills
- Mobile phone contracts
- Loan repayments
- Credit card repayments
- Mortgage payments
Missing payments may have a negative effect on your credit history.
Before taking on any new financial commitment, it is important to make sure the repayments are manageable while continuing to meet your regular household costs and other financial commitments.
Only borrow if you need to
Every time you apply for credit, the lender may record the application. Making several applications over a short period may affect how some lenders assess your application.
If you are thinking about borrowing, it may be useful to see whether the lender offers an eligibility check first. An eligibility check may give an indication of whether you could qualify without affecting your credit score.
Build savings if possible
If you can afford to, putting money aside may help you prepare for unexpected costs. Only do this if it does not affect your ability to pay your essential bills and other financial commitments.
Having savings may mean you are less likely to rely on borrowing if an unexpected expense comes up.
How long does it take to rebuild a credit score after bankruptcy?
There is no fixed answer. Everyone’s circumstances are different. Your credit history may improve over time if you make payments on time and manage your finances carefully. However, this process may take months or years.
Even after a bankruptcy is removed from your credit file, lenders may still compare your circumstances against their own lending criteria before deciding whether to offer credit.
Can you get a loan after bankruptcy?
Some lenders may consider applications from people who have been bankrupt. Others may not.
Whether you qualify depends on several factors. These could include:
- Your income
- Your regular household spending
- Your credit history
- Any existing debts
- The lender’s own criteria
If you are considering a secured loan, remember that your home is used as security. This means your home could be at risk of repossession if you do not keep up with repayments.
Things to consider before applying for credit
Before applying for any type of loan, it may be useful to think about a few important questions.
Are the repayments affordable?
Make sure the repayments are manageable while continuing to pay your mortgage or rent, household bills and other regular commitments.
What is the total cost?
The monthly payment is only part of the picture. It is also important to look at the total amount you would repay over the full loan term, including any interest and fees shown in the terms and conditions.
Is the interest rate fixed or variable?
Some loans have a fixed interest rate. Others have a variable interest rate. A variable interest rate may change over time. This means your monthly repayments could go up or down. See our blog on fixed vs variable loans for more information.
Do you need to borrow?
Borrowing is not the only option. If you are struggling with debt, it may be helpful to speak to your existing creditors about a payment arrangement.
You may also wish to get free, independent guidance from organisations such as MoneyHelper, StepChange or National Debtline.
Recovering from bankruptcy is a gradual process. Making payments on time, checking your credit report regularly and only applying for credit when you need it may all help build a stronger credit score over time.
Need more guidance on building your credit score or managing your finances? Visit our Help & Advice page.
Representative 21.82% APRC (Variable)
For a typical loan of £18,900 over 180 months with a variable interest rate of 18.72% per annum, your monthly repayments would be £335.99 for 179 months and then a final payment of £335.79. This includes a Product Fee of £1890.00 (10% of the loan amount) and a Lending Fee* of £763.00, bringing the total repayable amount to £60,478.00. Annual Interest Rates range between 8.6% to 27.87% (variable). Maximum 50.00% APRC. *Lending Fee varies by country: England & Wales £763, Scotland £1,051, Northern Ireland: £1,736.
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
