Tag Archives: debt relief

Why is my debt relief order still affecting my credit rating?

Dear James,

I had a debt relief order about two years ago and I don’t understand why it is still saying that my credit rating is bad?

Cherie, Paignton

Dear Cherie,

It’s great that you’ve taken steps to regain control of your finances using a debt relief order (DRO). Assuming this is now fully discharged your debts should have been cleared or at least written off, which is a positive step forward for you. Unfortunately, your credit rating is likely to take a little longer to recover as your credit report looks back over the past six years of your borrowing history. But there may be things you can do to improve your credit rating right now.

Start by checking your credit report to make sure the DRO has been updated as ‘discharged’. If it hasn’t then please tell us. You should find that the accounts that were included in your DRO are shown separately on your report, which is quite usual. These accounts are likely to be shown as defaults, as you broke the terms of your agreements. Like the DRO, defaults stay on your report for six years, from the original date of default. Importantly, any defaults should also be marked as satisfied or partially settled so if any aren’t you should contact the relevant lender. If you need help, ask us to raise a query with them on your behalf. Your credit rating is likely to improve in the short term once the DRO and any individual defaults are marked as cleared, and in the medium term as they get older. Some lenders will rate your most recent credit history more highly than events that took place several years ago. However, some lenders may also have a policy whereby they refuse applicants that have a default on their credit report regardless of how old it is and whether it has been paid or not.

Additionally, if the reason for you defaulting was the result of something out of your control – such as losing your job or a serious illness – you might benefit from explaining this on your credit report. Simply send us a statement of up to 200 words describing any relevant circumstances and we’ll add this to your report. Known as a notice of correction, lenders will see this when they check your report in the future and should factor it in to their decision. Please note we can’t add a statement that is frivolous, factually incorrect or defamatory (January 2016)

You can find archived Ask James questions arranged under subject headings such as ‘applying for credit’, ‘credit and debt’ and ‘fraud’ at the main Ask James page.