The UK Insolvency Helpline, concerned about the proliferation of unregulated debt management companies that have begun operations in the last few years, is a network of professional lawyers, accountants, licensed insolvency practitioners and debt management firms.
It exists to provide reliable and independent money advice to those people seeking debt help and consequently provides valuable information relating to credit after bankruptcy and getting a mortgage after bankruptcy.
Credit After Bankruptcy
Getting a mortgage after bankruptcy is not impossible but in the current financial conditions it is difficult and will depend on a number of factors. The Insolvency Helpline recommend that ex-bankrupts do not apply for a mortgage for at least two years. In that time they must take active steps to improve their credit rating.
Basic Bank Accounts
To improve the chances of getting a mortgage after bankruptcy a bank account is essential to help in the credit rebuilding process. It may be that some people may not have had an account during bankruptcy but after discharge it should be possible to open a basic bank account, which should be upgraded as soon as possible.
By depositing on a regular basis and demonstrating to the bank that there is always some disposable income which is being saved is a good way of building trust, particularly if the bank is approached to provide a mortgage after bankruptcy. Savings are essential as it is likely that the majority of mortgage lenders will ask for at least a twenty percent deposit.
Apply for a Credit Card to Rebuild Credit Score
Using a credit card is a recognised way of re-establishing a good credit score however it’s important that spending be kept at reasonable levels and is paid in full each month although it’s likely that after bankruptcy obtaining a ‘standard’ credit card will not be possible. Ex-bankrupts will have a better chance of getting a high interest card, which is fine because paying in full means no interest charges will accrue.
Before lenders will consider a mortgage after bankruptcy they will obtain a credit report from one of the credit reference agencies: Experian, Equifax or Callcredit so all applicants should ensure their credit report is accurate.
Bankruptcies will remain on a credit report for six years but should be removed after this period. If this has not been done people should contact the credit reference agencies to have it deleted. It’s the same procedure for any other inaccurate entries.
Bearing in mind that excessive searches on a credit file will have an adverse effect it’s certainly worthwhile before applying to lenders asking them if they have a specific policy about supplying a mortgage after bankruptcy.
Mortgage after Bankruptcy
Credit reference agency Experian, in response to a question about getting a mortgage after bankruptcy sum it up this way. “You didn’t get into credit trouble and have to declare bankruptcy overnight and you can’t become a great credit risk overnight. It might take months, or maybe even years but keep doing the right things and in time you will restore a good credit history.”