If you are thinking about starting a Trust Deed one of the main things you will be interested in is how your credit rating will be affected.
It is important to understand that if you start the Arrangement a record will be added to your credit file. This will show up if anyone does a credit check against you and effectively make your credit rating poor.
The fact that your credit rating is bad will mean that any application for credit that you make will normally be refused. Having said that though you will still be able to use some forms of credit during the agreement.
How long will your credit rating be affected by a Trust Deed?
Your Trust Deed will remain recorded on your credit file for 6 years from the date it starts. During this time, it will show up if anyone carries out a credit check against you. This is very likely to stop them from lending you more money.
After six years have passed, the record of your Trust Deed will be taken off your credit file and your credit rating will start to improve again.
It is important to understand that it is possible for any of your creditors to record a formal default notice against you after the date that your Trust Deed started. In the same way as the record of your Trust Deed, default notices will also remain on your credit file for 6 years. It is therefore possible for a default notice to remain on your file after the record of your Trust Deed has been taken off thus extending the time that your credit rating is affected.
The way to overcome this is to get a copy of your credit file after your Trust Deed finishes. If you find any default notices have been added after the start date of your Trust Deed then you should contact the associated creditor and request that the date of the default be changed to the date your Trust Deed started.
Do you want help to start a Trust Deed? Give us a call on 0800 077 6180 or complete the form below to speak to one of our experts
Will my credit rating be affected anyway?
If you are struggling with debt and you are no longer able to pay your creditors, your credit rating will be affected whether you start a Trust Deed or not.
As such, if you are in a position where you are unable to afford to pay your creditors and cannot help but miss your normal payments to them, worrying about your credit rating should not be the primary factor to consider when deciding whether to do a Trust Deed.
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