Rebuilding your credit after a trust deed

Rebuilding your credit after a trust deed takes time, and nobody can promise a result. The trust deed stays on your credit file for 6 years from the date it began, and on the public Register of Insolvencies until 12 months after it ends. What you can do is get your free statutory credit reports, make sure the trust deed and your old debts are recorded correctly, and build a steady record of paying on time.

This page goes further than our guide to how a trust deed affects your credit rating, which explains what lenders see and for how long.

How long does a trust deed affect your credit?

The individual debts in your trust deed may also show defaults. The Information Commissioner’s Office (ICO), which regulates how personal data is used, has said it is unlikely to be fair for a debt to stay on your file for more than six years from the date of the original default. Citizens Advice Scotland says credit reference agencies record trust deeds among the public records they hold in Scotland.

Step 1: Get your statutory credit reports

The three main credit reference agencies in the UK are Equifax, Experian and TransUnion. The ICO says:

• you have the right to a copy of the information about your financial standing from each of them, free of charge
• look for the words “statutory report” on their websites. You do not need to sign up to a paid subscription
• you can ask verbally or in writing, and if you write, include your full name, any other names you have used in the last six years, your addresses over the last six years and your date of birth
• the agency normally has one month to respond, and may need proof of your name and address first

Lenders do not have to report to all three agencies, so the files can differ. The ICO suggests starting with one report, or asking your lenders which agencies they use. If you try a free trial of a paid service, Citizens Advice Scotland reminds you to cancel before the trial ends or you may be charged.

Step 2: Check the trust deed is recorded correctly

Look at each entry and check:

• the trust deed’s start date, because the 6 years run from it
• each debt included in the trust deed, and whether it is shown as part of it
• the dates of any defaults, especially if a debt has been sold to a debt collector. The ICO says a sold debt should not appear in a way that looks like two different debts or keeps it on your file for more than six years from the original default
• financial links to other people. The ICO says you should only be linked through a joint account or joint credit, not just by living at the same address, and you can ask to be separated from someone once a joint account has closed
• your electoral roll entry, which the agencies also hold

After you are discharged

When you are discharged, the Accountant in Bankruptcy (AiB), the Scottish agency that supervises trust deeds, says you will receive a certificate confirming the debts included in the trust deed are written off. Keep it safe.

The ICO’s guidance for people discharged from bankruptcy is that lenders are not told automatically. It says to send each lender evidence of your discharge and ask them to update their entry, and that discharged accounts usually show as settled or partially settled with nothing outstanding. If a lender refuses, or has not updated the entry within one month, you can complain to the ICO. That guidance is written for bankruptcy, so ask your trustee whether you should do the same for your trust deed. See getting discharged from a trust deed.

If something is wrong

Raise it with the credit reference agency and with the lender that supplied the information. The ICO says the lender is usually responsible for the entry and can update it directly. If they will not correct a clear mistake, you can complain to the ICO. Citizens Advice Scotland points out that you cannot ask for accurate information to be removed just because you do not want lenders to see it.

You can also add a notice of correction: a short statement explaining your circumstances, which anyone who looks at that entry will see.

Step 3: Build a steady record

• Register to vote at your current address, and check it shows on your file.
• Pay on time. Citizens Advice Scotland says account information shows lenders whether you have made payments on time, and the ICO says most of what the agencies hold is about how you have managed credit and service accounts, such as energy and phone accounts.
• Keep a working bank account. If you have been refused a standard account, a basic bank account is designed for people with a poor credit history. See bank accounts and a trust deed.
• Do not make lots of applications at once. Citizens Advice Scotland says applying to lots of lenders leaves a trail on your file that may affect your score, and the ICO says many searches in a short time can suggest you are having problems getting credit.
• If you are refused, ask why. Citizens Advice Scotland says a lender that refuses you after checking your file must tell you which credit reference agency it used, and the ICO says you can ask the lender to explain the main reason and review its decision. Different lenders score differently, so a refusal from one does not always mean a refusal from all.
• Be wary of anyone charging to “repair” your file. You can check your reports and dispute mistakes yourself, free.

Should you borrow during the trust deed?

You are not legally barred from applying for credit during a trust deed. But mygov.scot says it may be harder to be accepted, new borrowing may affect your ability to keep up your trust deed payments, and debts you take on after signing cannot be included in the trust deed, so you would not be protected from action by those new creditors. Check your trust deed’s terms and speak to your trustee before applying for anything, including car finance or a phone contract on credit. See car finance during or after a trust deed.

After the trust deed, only borrow what you can afford to repay. If you do find credit hard to get from mainstream lenders, Citizens Advice Scotland suggests checking whether there is a credit union in your area, and warns against illegal money lenders (loan sharks).

How do other options compare?

Every formal debt solution in Scotland affects your credit. A debt payment programme under the Debt Arrangement Scheme (DAS) stays on your credit file for at least six years, and sequestration (bankruptcy in Scotland) and the Minimal Asset Process are recorded on the Register of Insolvencies. A trust deed also has fees, may mean releasing equity in your home and cannot include every debt, and if it fails, creditors can pursue you again and your trustee can petition for your sequestration. If future borrowing matters to you, ask an adviser how each option would affect it. Free, impartial advice is available from the services in free debt advice in Scotland.

Official sources

• Information Commissioner’s Office: credit
• Citizens Advice Scotland: how lenders decide whether to give you credit
• mygov.scot: how a trust deed could affect you
• mygov.scot: at the end of the trust deed
• AiB protected trust deed information document