At Debt Support Trust we help people with a variety of different needs and concerns, such as "how will this affect my partner", "will my employer know" and "what will happen to my credit rating". Many people, understandably, worry a debt solution may affect their credit rating. It's important when entering any financial solution that you know the positives and negatives, so hopefully this article can help.
There is life after debt problems, but how will a debt solution affect your credit rating? Will you be able to apply for a mortgage once you're debt free? And, what if you have an excellent credit rating but you need to apply for a debt solution?
If you're unsure whether your credit rating will be impacted then it's best to speak to a debt adviser. Debt Support Trust advisers are available Monday - Friday 8am to 7pm on 0800 085 0226.
Protecting Your Credit Rating In Debt
One common misconception is that entering a debt solution is the only way a credit rating can be negatively affected. A person's credit rating will be impacted any time a default is added to show a missed payment or anything which breeches the original contractual arrangements.
Entering any debt solution may negatively impact on a person's credit file, however we often find by the time we speak to someone their file will already have defaults added. If you have never missed a payment to your credit card, loans or other contractual obligations then you may have an excellent credit score. If you're not sure then it's best to check your credit score. You can do this for free, for life with Creditkarma.co.uk.
If you do have a default on your credit file then each default will last for 6 years from the date it was added.
Life After Debt
If you have had a "poor" credit file due to missed payments and defaults then the next step is to attempt to improve your credit rating. You can do this by acquiring your credit report and ensuring there are no errors on the report. Unfortunately if you have defaults on your credit file or late payments, you won't be able to remove these without the consent of the lender. However, moving forward these will be removed and your credit file will slowly improve.
Borrowing manageable amounts of credit and repaying the full balance each month can also help to improve your credit worthiness. If you have debt problems then it would be best to address these as a debt solution will most likely affect your credit file further, but can also help you on the road to repairing your credit report after the solution is complete.
Credit ratings can improve over time and people who have been in debt can often apply - and be accepted - for mortgages once their debt problems have been rectified.
Advice For Your Credit Report
If you're unsure about the best way to deal with your debt and finance problems then you can speak to one of our debt advisers on 0800 085 0226. We can provide you with advice and support on how to access your credit file and provide a detailed understanding of what each section means.
Alternately you can complete our online debt test and we will be in touch to provide further support.