The actual process of going bankrupt may turn out to be a whole lot less painful than you thought it was going to be. That’s the good news. The bad news is that after you are discharged from bankruptcy, you still face the long, hard, slog to restore your credit rating. The good news is that it is possible. Here are some tips.
As soon as your bankruptcy is confirmed, check your credit files and see if they need cleaning
You will need a copy of your credit file from each of the major agencies (Experian, Equifax and CallCredit) and you need to go through each and every one of your defaults to check that the date on it is correct. This may not be the most fun way you’ll ever spend an evening (or any other time of day) but it may be one of the most important financial actions you’ll ever take.
Basically, your time in financial purgatory starts from the date of your default, hence if that date is wrong, your release date will be correspondingly delayed. You, therefore, need to check your files and see if all the default dates are correct and, if not, by how much they are wrong. This will allow you to make a judgement call on whether or not getting the entry corrected is worth the effort it will take.
If you decide that it does matter, then you usually need to contact the reporting company rather than the credit agency. The best approach is to try politeness first and if that doesn’t work try quoting GDPR. This should still apply even in the event of a no-deal Brexit and even if it doesn’t there should be some corresponding regulations you can quote.
Start doing everything you can to show you’ve learned your lesson
Obviously, pick off any low-hanging fruit which offers a quick win for your credit rating, for example, make sure your name’s on the electoral roll at the address which you plan to use to apply for credit. After that, do whatever it takes to get some form of credit line, however minimal. For example, if you have a mobile phone you’re happy to keep using, you could try getting a SIM-only deal on month-by-month renewal. Your best chance would be to go for a deal which is essentially “all-you-can-eat” basically so the mobile phone company knows it’s going to get its money up-front and not have to worry about billing you in arrears.
As soon as you possibly can, sign up for a credit card from a lender which specializes in people with a poor credit history and building up a track record of responsible borrowing. Please note, however, that, for practical purposes, responsible borrowing just means that you make the minimum payment each month. If you go down this road, you will pay eye-watering finance charges and may well find yourself sliding back down the slippery slope which led you to bankruptcy in the first place. In other words, in this context “as soon as you possibly can” means not just when you’re financially ready, but also when you’ve overcome any emotional issues which led to you going bankrupt and are confident you can handle credit responsibly.
Once you are discharged, check your credit files again
Basically this is essentially a rerun of the first paragraph, except this time round it may be a bit more fun because you’re looking for your data of discharge, rather than your date of default. As with the first paragraph, if the dates are wrong, then you need to decide whether they’re wrong enough to bother you and if so, you need to raise it with the reporting companies.