In this brief guide, we are going to answer the question ”how long does bad credit last in the Uk” and how to get a credit product with bad credit in the UK.
How long does bad credit last in the UK?
Bad credit will usually last at least 6 years in the UK. This means it will be on your credit file for at least 6 years. In some cases, you may be able to get the bad credit mark removed within a particular timeframe if you settle your debt or if the bad credit marker was incorrectly put on your credit file.
As long as the bad credit is on your credit file you will find it much more difficult to get credit.
Nobody wants bad credit as it really takes a hold on your financial life and makes it very hard for you to get products such as mortgages, credits cards, personal loans and all other financial products
|Bad credit||How long it lasts|
|Bankruptcy||6 or 15 years|
|Late Payments||6 years|
|County Court Judgements||6 years|
|Debt Relief Orders||6 years|
|Individual Voluntary Arrangements||6 years|
How could you have attained bad credit?
You could have gotten bad credit from a lot of ways.
It is important to note that most financial products report the payment repayment history of their borrowers to the credit bureaus who then hold this credit data for up to 6 years.
This means the payment history on your mortgage credit card or car finance products could very likely be reporting your repayment history to the three main credit bureaus in the UK: Experian Equifax, Crediva and Transunion.
You could have gotten bad credit by:
- Missing a credit repayment
- Being late on a credit repayment
- Defaulting on a credit repayment
- Applying for too many credit products in a short time
- Not being on the electoral roll at your registered address
- Closing credit accounts soon after opening them
- Having a county court judgement against you
- Being registered as bankrupt
- Being on a debt management plan
- Being on an individual voluntary arrangement
- A debt relief order
Bad credit could have been incurred by having way too many credit products and losing control of your finances or maybe you lost your job or a family member and things to a downward spiral.
What do the different bad credit markers mean?
The different bad credit marks you could have on your credit file all carry a different weight.
As we have established above, bad credit could last as much as 6 years in the UK but what does the specific bad credit mean for you and how could it have been incurred.
Late payments or defaults
A credit provider or utility company may report you as being late once 30 days from the payment date have elapsed.
To ensure you don’t miss any credit repayments you should ensure you set up a standing order or direct debit mandate for each of your credit and utility products.
The repayment history on your credit or utility accounts will remain available for 6 years.
County court judgement
A county court judgement could be given against you if you have received a county claim from a creditor for unpaid bills.
If you fail to respond to the county court claim then a county court judgement could be issued against you.
You could get the county court judgement set aside within 28 days if you can prove the debt is not owed.
Once a county court judgement has been issued against you the claimant will be able to go back to the court to seek enforcement action.
Individual voluntary arrangement
An individual voluntary arrangement is an arrangement which you enter into voluntarily with your creditors.
An IVA is a legally binding agreement which states that a said amount of money must be paid each month towards your debt or debts.
There will be no interest charged and you will usually complete your repayments within 5 years.
At the end of the term, any money still owed is written off.
An IVA will show on your credit file for 6 years.
A default will stay on your credit file for 6 years.
A credit account could be marked as default when you have missed a set amount of credit repayments.
A lender will usually send you a default notice warning letter before a default is issued.
This will allow you one final chance to bring your account up to good standing.
Applying for credit products with bad credit
In general you may find it much harder to get credit products if you have bad credit but this does depend on the type of bad credit you have and how long it has been.
Most credit providers use automated decision systems when giving credit decisions but you may very well find that there are those who are willing to offer manual underwriting.
Manual underwriting means you will be able to present more supporting documents to the credit provider and explain how you incurred the bad credit.
If it wasn’t your fault , for e.g a redundancy then you may find that some credit providers may still offer you credit.
What to expect when applying for credit with bad credit
Below are what you can expect based on the different credit products when applying with bad credit in the UK
Mortgages with bad credit
Applying for a mortgage with bad credit will be straight forward but your chances of getting your mortgage application approved ill depend on the mortgage lenders lending criteria.
There are a lot of mortgage lenders who offer bad credit mortgages but if you will be accepted by this mortgage lenders or not depends mostly on your own circumstances first:
- Your mortgage deposit
- Your credit score
- The type of property you are buying
Some mortgage lenders who focus on bad credit mortgages will expect you to pay a higher mortgage deposit and will charge a higher mortgage rate on your mortgage.
Credit cards with bad credit
Getting a credit card with bad credit may be much harder as most credit card providers do not do manual underwriting but instead provide credit decisions via automated decision making systems.
Personal loans with bad credit
When applying for a personal loan with bad credit you may find the process similar to those of mortgage lenders depending on how much you are applying for.
How to improve bad credit
To improve bad credit you can follow the below steps
- Keep your credit accounts open for as long as possible
- Avoid making too many credit applications in a short time
- Avoid payday loans
- Get a secured credit card or a credit builder loan to show good repayment behaviour
- Check your credit score regularly.
Checking your credit score regularly is one of the ways to ensure that the information on your credit score is indeed up to date.
It also informs you on what your credit score is and this allows you to have an idea of which credit providers may lend to you.
If you find any errors on your credit score or report you can contact all of the credit bureaus or the specific credit bureau where the error is mentioned and ask them to make the necessary corrections.
The credit bureaus will check and investigate the matter but in the meantime put a notice of correction on the record entry so that any third parties who are checking your credit score will be aware that the entry may be incorrect.
The credit bureau will usually let you know the outcome of their investigations within 28 days.
If you are unsure of what your credit score is then you should check your credit score from the four credit bureaus in the UK: Experian, Crediva, Equifax and Transunion.
Some of these credit bureaus may charge you a fee to view your credit report so what you can alternatively do is request a statutory credit report which is a free credit report which each credit bureau must provide to you upon you requesting it.
Alternatively, you can also use credit score services such as Checkmyfile and clearscore to check your credit report.
FAQs: How long does bad credit last in the UK?
Will my credit score improve after 6 years?
Yes, your credit score will improve after 6 years if you have had bad credit such as a CCJ, bankruptcy etc but this does not necessarily mean your credit score will just improve. If you have incurred more bad credit with that 6 years then your credit score will not naturally improve.
In this brief guide, we answered the question ”how long does bad credit last in the Uk” and how to get a credit product with bad credit in the UK.