An DRO will be shown on your credit record for six years. This article looks at what should happen, how to correct any problems, and how to start to improve your credit rating when the twelve months of your DRO ends and your debts are wiped out.
Even if you never want to be in debt again, a good credit score makes it easier to get a tenancy agreement, get a mobile contract and it’s essential if you ever want a mortgage.
How a DRO should be recorded
To make sure you don’t miss any problems, check your credit records with all the Credit Reference Agencies.
After your DRO is approved:
- the DRO will be shown in the Public Record section of your credit record;
- any debts which are in your DRO but not marked as defaulted should have a default date added which is the date your DRO started;
- there will be no change for any debts which have already been marked as defaulted or for any CCJs;
- there will be no change for any debts which do not form part of your DRO.
You don’t get sent a certificate when your DRO ends after the year “moratorium period”, see What happens at the end of my DRO? for details. As that says, it is good if you can print off your Insolvency Register entry when your DRO finishes – this will disappear three months later.
At the end of the 12 months:
- the Public Record section of your credit record will be updated to say your DRO has completed. This DRO marker will remain on your record for 5 more years, until six years from the start of your DRO;
- the debts included in your DRO should be marked by the creditors “to show that you no longer owe money on that account (perhaps by marking the entry as ‘partially satisfied’ or ‘partially settled’ or in some other way)” (quote from the Information Commissioner’s Office) and the balance on the accounts should show as zero.
At the end of six years:
- the DRO marker will drop off your credit record;
- some of the DRO debts may already have disappeared and the rest should go at the same time as the DRO marker (because their default date should be on or before the date your DRO started;
- CCJs drop off six years from the judgment date, so they should already have dropped off by this six year point;
- at this point your credit record should be completely clean.
The only creditors that will be able to tell you had a DRO after the six year point are those who had a debt included in your DRO – they may still be able to see the DRO on their internal records. If you apply for a mortgage, a few lenders will ask on the application if you have ever had a DRO – it’s good to go through a mortgage broker, not direct to a bank to avoid any problems with this.
1) Creditor uses a default date which is after your DRO started
If the default date is later (or not there at all!) it will delay the point at which your credit file becomes clear. You can ask the creditor to correct the record. (Don’t ask the credit reference agencies – they just report what the creditors tell them.)
I suggest waiting a few months after the start of your DRO before you bother to do this. Don’t try to do this on the phone, instead write the following letter to the Data Controller for the creditor (get the address from the ICO ), send it Recorded Delivery and keep a copy:
If the creditor replies saying they don’t know anything about your DRO, talk to the DRO Unit about whether the creditor has been informed.
If the creditor knows about your DRO but refuses to add or correct the default date, complain to the ICO. Attach copies of your letter to the creditor, proof of posting and any reply from the creditor.
One exception – mortgage shortfall debts are unusual in a DRO but if you have one, read How to repair your credit record after bankruptcy which covers these debts.
2) Creditor doesn’t mark debt as satisfied when your DRO has finished
The creditor doesn’t have to mark the debt as fully settled/satisfied so there is no point in complaining if the debt has been marked as partially settled/satisfied.
If the debt isn’t showing as closed with a zero balance, send the following letter to the data controller for the creditor:
Again, complain to the ICO as above if the entry is not corrected.
3) CCJs are not amended
The court only has to mark a CCJ as satisfied if you have paid it in full, which you haven’t – there is no ‘partially settled’ status for a CCJ. The best you can do is to add a note to your credit file to say that the debt was included in your DRO which ended on dd/mm/yyyy.
Is it worth doing this?
Yes. It is worth correcting the dates of default unless they are just a bit late. If these are months or even years late, then this will delay the time until your credit file is finally clean as these debts will remain for six years after the default date.
It’s a long while – five years or more – until a debt in your DRO will drop off your credit record completely, so it’s a good idea to get them all correctly marked to show that you no longer owe any money. This improves your credit rating slightly, which may be enough for you to be approved for a ‘bad credit’ card, see below. It also prevents the debt being ‘sold on’ to another Debt Collector, which is annoying as you have to correspond with yet another person and send them details of your DRO.
Getting positive markers on your credit file
Once your DRO has ended, it’s good to start acquiring new, positive credit marks on your credit record. First deal with the “clean up” process outlined above for your old debts. And make sure that you are on the electoral roll, your address and any other details are all correct with the credit reference agencies. This may take several months to complete if you have to go to the ICO.
Then apply for a Vanquis or a Luma credit card. Vanquis is owned by Provident, Luma is owned by Capital One – if you had a debt to one of these companies s in your DRO apply to the other one to maximise your chance of being accepted. If you are refused, double-check your credit file really is clean with all three credit reference agencies, wait a few months, then apply for the other card.
These cards charge very high rates of interest. This doesn’t matter because you should aim to repay it in full every month, so you never pay any! If you find you can’t clear the balance in full, you need to stop spending on the card until it is cleared and have a re-think about budgeting. Your credit rating will not improve faster if you leave a balance on this card.
At some point, you will probably want to be able to get affordable credit to spread the cost of a purchase. This is a good time to prepare for that by getting an account with your local credit union.
This takes time
If you were expecting the end of your DRO to make a large, immediate improvement to your credit score, it usually doesn’t.
Don’t pay any firms offering a ‘repair your credit’ service because either they don’t work at all, or they will be no better than what you can do yourself. In August 2016 a firm called Bad Debtor was offering just such a useless service – its website has now been taken down.
The template letters here are very likely to work and if they don’t, putting in a complaint to the ICO is the best way to repair your credit.