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Bad credit is something many of us actively try to avoid, and it’s probably fair to say that nobody sets out to wind up in a situation where their credit history means they can’t borrow money when they need to. However, there are many reasons why people find themselves in this situation.
Perhaps you made some mistakes with your finances in the past, or maybe the need to pay for an emergency situation or unexpected expense one month has meant falling behind on other credit repayments or bills and you’ve been unable to get back on track. Whatever the cause, if you’re unable to remedy a negative financial situation quickly once it occurs, it will likely go on to impact your credit history and your ability to borrow in the future.
Should you find yourself in a situation where you’ve built up a negative credit history, you may be wondering ‘how long does bad credit last’? How long will it continue to impact you? Here, we’ve looked into how long different “bad credit” events may stay on your credit report and how this might impact your ability to get new credit should you need it.
Information, good or bad, typically remains on your credit report for six years, or occasionally longer. Information regarding all your credit accounts will be recorded on your credit file, so lenders will be able to see if you’ve kept them up to date – and so demonstrate your ability to manage your financial commitments well – or not.
Even if an account is now closed, your credit report will show whether it was closed in good standing, i.e. you’d made all the payments required of you on time and so closed on good terms, or if it was closed in bad standing, if you settled the account late or only in part.
Below, we’ve listed the different types of negative markers that you may experience if you do not keep your credit accounts up to date, and how long it will take for them to cease showing on your report. If you are struggling to make payments on your debt and need help, it’s important you speak to a not-for-profit, free debt advice service. We have more information here.
|Type of bad credit||Time it takes to be removed from your credit report|
|CCJ (County Court Judgment)||6 years (or, if you pay the amount owed
within a month of it being issued, it will be removed)
|IVA (Individual Voluntary Arrangement)||6 years|
|DRO (Debt Relief Order)||6 years|
|Late payment||6 years|
It’s worth noting that although records of your financial behaviour stay listed on your report for a for six years, once you have resolved them, and have built a few years worth of history demonstrating that you can and will repay what you borrow, then your past will be less of a reflection on how you’re likely to manage future borrowing.
Patience is key, as is careful and small credit rebuilding over time. The goal is to demonstrate to future lenders that you are able to pay back what you borrow, and the bad credit is being overcome and firmly in the past. To start rebuilding your credit history, you could consider a dedicated credit rebuilding credit card with a low limit and that you pay back in full every month.
Our guide on how to fix bad credit can help, if you’re looking to improve your credit rating.
Representative Example: Borrowing: £1000 for 18 months, Total Repayable: £1853.43, Total Interest: £853.43, Interest Rate (Variable): 89.9%. Rates between 9.3% APR and 1721% APR – your no-obligation quote and APR will be based on your personal circumstances. Loan term lengths from 3 to 36 months. Subject to lender’s requirements and approval.
Sunny Loans is a registered trading name of Upward Finance Limited, who is an introducer appointed representative of Flux Funding Limited, who is a credit broker, not a lender. Loan repayment terms are 3-36 month loans.
Warning: Late repayment can cause you serious money problems. For help, go to www.moneyhelper.org.uk.
Any kind of business that you have a financial relationship with: a bank, a mortgage company, a credit card issuer, or even a letting agent is very likely to use your credit report to assess your creditworthiness before accepting your application. They will be looking to see that you have a history of making the payments required of you in full and on time.
Evidence of the type of events like defaults and CCJs raise red flags to lenders, as they indicate that you are, or have been, experiencing financial difficulty, or will not pay them what you’re due to for another reason. This means you may find it difficult to borrow money, which might hinder you if you need to use credit for a financial emergency or for a planned purchase.
If there’s a good reason for your having a negative marker like a late or missed payment marker on your report, such as if you were unwell and unable to work, or lost your job, you can file a notice of correction on your credit report, which is a 200 word statement that allows you to explain your circumstances. This will then be visible to other lenders who view your credit report so that they can take it into account when deciding whether to approve your application or not.
Over time, the impact bad credit markers have on your ability to get credit will lessen. Whilst you wait, you can become more knowledgeable about rebuilding your credit rating for the future, should you ever need to use credit, either for a short-term loan or for a longer-term borrowing need.
Whatever your reason for having bad credit, it’s important to seek free, impartial advice from a not-for-profit debt advice agency if you’re finding it difficult to manage your finances, and find a way to clear what you owe to get back on track. The Money Helper, StepChange and National Debtline are three not-for-profit services that are here to help.
If one of these bad credit markers is issued against you, they will remain on your credit report for six years – even if you pay back what you owe in full. This means if you’re looking to apply for a larger credit product, such as a mortgage, it may be easier to wait until the default or CCJ has dropped off your report before applying, or seek expert advice from a broker or even a free financial service – such as Money Helper or Citizens Advice.
We’ve taken a look at how long it takes to repair bad credit in detail in our guide – take a look and find out how long it takes to clear bad credit.