Being accepted for credit and rebuilding your credit score after bankruptcy can be challenging, not least because a record of it remains on your credit file for six years after you’ve been discharged. This means lenders may view you as a potentially high-risk customer and limit your access to credit.
But just because building your rating without access to credit can be difficult, it does not make it impossible.
Vanquis Bank offers credit cards designed to help people in difficult circumstances to rebuild their credit rating. For more information, visit our Credit Cards Page.
What does it mean when a bankruptcy has been discharged?
Being discharged from bankruptcy means you have been released from liability for certain debts by the Official Receiver (OR). In short, you are no longer bankrupt.
It’s worth noting that bankruptcy UK law stipulates that certain debts cannot be automatically written off as part of your bankruptcy discharge, including:
- Magistrate court fines
- Maintenance and child support payments
- Student loans
- Social fund loans
- Certain benefits and tax credit overpayments
What happens after a bankruptcy discharge?
If you declare yourself bankrupt, or you’re declared bankrupt, you’ll usually be discharged 12 months from the date the bankruptcy order was made.
The discharge process is automatic, but if you’ve not cooperated and been completely honest with your official receiver (OR) or trustee, or you’ve not acted responsibly during your bankruptcy, it might not be ended after a year. This is known as a delayed discharge or suspended discharge and can extend your bankruptcy for up to 15 years.
Once you’ve been discharged from your bankruptcy, you’ll be free of some of the financial restrictions imposed by the order, meaning:
- You can now act as a company director, unless there is another reason why you can’t hold that position.
- You no longer have to worry about any assets, pay rises, bonus payments or other windfalls being used to pay creditors. An exception to this is any payment protection insurance (PPI) mis-selling compensation payments, from claims made before your bankruptcy.
It’s worth noting that you won’t be sent confirmation of your bankruptcy discharge, but you can get proof of your discharge by getting a free confirmation letter by calling discharge queries on 0300 678 0015.
Alternatively, you can get or a Certificate of Discharge from the court that dealt with your bankruptcy, subject to a £70 fee and a £10 charge for each extra copy.
When you have completed a discharge of bankruptcy in UK courts, your details will automatically be removed from the Insolvency Register three months after your discharge.
If you want to have your bankruptcy removed from the Land Charges Register, you’ll need to apply to HM Land Registry.
If you want your discharge to show on your credit file, you’ll need to send confirmation to each of the main credit reference agencies - Equifax, Experian and TransUnion (formerly CallCredit) - and ask them to update your file.
Your bankruptcy will still be visible on your credit file for six years after your bankruptcy’s discharge date, but once your bankruptcy has been discharged, you can start to rebuild your credit file.
How to get credit after bankruptcy
Until you’re discharged from your bankruptcy, you’re legally not permitted to borrow more than £500 from any lender without declaring your bankruptcy.
Once you’re discharged, there’s no legal limit on the amount you can borrow, but you might find it difficult to get accepted for loans, credit cards and overdrafts for the six years that the bankruptcy is visible on your credit file. This is because lenders will still see you as a credit risk, and will either refuse to lend to you or offer credit with a higher rate of interest, to reflect this risk.
The best way to get credit after your bankruptcy has been discharged is to apply for financial products that have been designed for people with bad credit or from lenders who specialise in poor credit loans and credit cards.
Before you apply for any form of credit after bankruptcy, you should make sure your discharge has been included on your credit report, and then check your credit file for any mistakes. If you find any, notify the relevant credit referencing agency to get them corrected.
You are then able to consider applying for credit to help rebuild your score.
Too many credit applications in a short space of time can have a negative effect on your credit score, so searching specifically for loans or credit cards designed for bad credit can help to rebuild your credit.
Rebuilding credit after bankruptcy
While repairing your credit rating after bankruptcy is difficult, it's not impossible. The most important thing is to follow all the terms of your bankruptcy order while it is in effect and do everything you can to keep up repayments on any debts that aren't covered by it.
A budget planner can help to keep track of your monthly income and outgoings, and if you think you might have trouble meeting a repayment, speak to your advisor as soon as possible to work out a solution.
If you are applying for credit cards or loans while you are bankrupt, you are legally bound to tell a lender that you’re bankrupt if applying for credit of more than £500, and for six months following your bankruptcy discharge.
Once six months have passed since your bankruptcy has been discharged, and assuming you haven't had any problems making your repayments, you are able to apply for credit again to improve your credit score. Ensure you can pay back what you borrow and this is one of the fastest ways to rebuild your credit rating, as it demonstrates that you can borrow and repay within limits.
Borrowing from a lender who specialises in helping people to rebuild credit not only means you are more likely to be accepted but they can help you set limits helping you to rebuild your finances more quickly and safely.
Best Vanquis credit card for discharged bankrupts
If you’re looking to rebuild your credit score following a bankruptcy, a Vanquis credit card could provide an effective credit line.
Our cards start with a manageable credit limit of between £150 and £1,000, and you could be eligible for a credit limit increase after your fifth statement, and a further increase every five months, up to a limit of £4,000.
How to apply if you’ve been through bankruptcy?
Before applying for any bankruptcy credit cards or loans, you can use an eligibility checker, which will give you an indication of whether your application will be accepted, without leaving a mark on your credit file – something which can affect your credit score.
To check your eligibility for credit cards for discharged bankrupts in the UK, go to https://www.vanquis.co.uk/enquiry and fill in our short application form. We’ll then give you a decision within 60 seconds.