Credit rating - impact of debt relief order

Summary

When you apply for a loan or other type of credit, the credit provider will search your credit reference file to see how much of a risk it is to lend to you. The level of risk is known as your credit rating. It can be affected by your personal financial details including: * how you've managed existing bank accounts and credit commitments * whether you've ever had your home repossessed Your DRO will show up on your credit reference file. It can reduce your chances of getting credit from some lenders, as it shows you've struggled to keep up repayments before. You're not allowed to get credit for £500 or more without telling the lender that you have a DRO. A lender might change their mind about offering you credit, when they see a DRO registered on your credit file. The note of your DRO stays on your credit file for up to six years after the date the DRO was made. This means it could be some time before you can get credit in the future. You might also struggle to open a new bank account during the DRO period and for some time after it has ended. If you need a new home while you've got a DRO, you could find that your options are limited. Many private landlords and letting agencies.

Key information

• how you've managed existing bank accounts and credit commitments
• whether you've ever had your home repossessed
• people you're financially linked to.
• Get a copy of your credit reference file
• When you apply for a loan or other type of credit, the credit provider will search your credit reference file to see how much of a risk it is to lend to you. The level of risk is known as your credit rating. It can be affected by your personal financial details including:
• how you've managed existing bank accounts and credit commitments
• Your DRO will show up on your credit reference file. It can reduce your chances of getting credit from some lenders, as it shows you've struggled to keep up repayments before.
• You're not allowed to get credit for £500 or more without telling the lender that you have a DRO. A lender might change their mind about offering you credit, when they see a DRO registered on your credit file.
• The note of your DRO stays on your credit file for up to six years after the date the DRO was made. This means it could be some time before you can get credit in the future.
• You might also struggle to open a new bank account during the DRO period and for some time after it has ended.
• If you need a new home while you've got a DRO, you could find that your options are limited. Many private landlords and letting agencies will insist on credit checks when you apply for a tenancy, and because the DRO will show up on your credit report, you may be turned down or charged higher fees.
• If you're not comfortable with how a DRO can affect your credit rating, you might want to think about a different debt solution.

Practical guidance

• Source: Credit rating - impact of debt relief order

Related topics

More in this area

• Check if a financial service has followed the rules
• Check if you have to pay a debt
• Check the rules after you go bankrupt
• Check what an IVA is
• Cold called by a debt management plan provider