24-Factor Credit Check: Bad Credit

One of the six Credit Factors on Credit-Score’s 24-Factor Credit Check is based on whether you have bad credit. These factors are very important, as they indicate to lenders that your reputation is in good standing. Having bad credit can seriously impact your access to credit. You may not be able to borrow as much or at all, or you may face higher interest rates.

Bankruptcy

In UK law, you can apply to become bankrupt if you cannot pay off your debts. This is usually the last-resort “nuclear option”.

When you have tried everything else to pay off your debts, or a licensed financial advisor has advised you to do so, you may declare bankruptcy. You can also be made bankrupt if you fail to pay debts of £5,000 and up, you break the terms of an IVA (see below), or you give false information to an IVA.

For most people, bankruptcy isn’t likely to be a concern, but careless borrowing can result in bankruptcy. Small business owners, particularly in volatile industries like the catering industry, are more likely to suffer a bankruptcy. However, it can happen to anyone. In January 2025, 592 bankruptcies were recorded, indicating a continued decline in bankruptcy cases over the past few years.

Overall, 9,706 individuals entered insolvency in January 2025, a 12% increase compared to January 2024. This total includes 3,847 Debt Relief Orders (DROs) and 5,267 Individual Voluntary Arrangements (IVAs).

The rise in DROs since April 2024 coincides with the abolition of a £90 administration fee and the expansion of eligibility criteria in June 2024. The debt threshold for DROs increased from £30,000 to £50,000, and the allowable value of an exempt motor vehicle rose from £2,000 to £4,000

These changes have made debt relief more accessible, contributing to the observed increase in insolvency cases.

If you have had a bankruptcy in the last seven years, it will negatively affect your credit score. After that time has passed, it’s striped from the record.

IVAs

IVA stands for “Individual Voluntary Arrangement”. It’s an alternative to bankruptcy for people living in England and Wales. If your debts become too much to manage and you enter insolvency, you can contact a professional insolvency practitioner to set one up. In practice, an IVA is a legal agreement between you and any parties to whom you owe money. Both sides agree on a repayment plan, and both have to stick to it. Any income you receive, including windfalls, will be used to pay off the IVA.

IVAs negatively affect your credit rating. They show that your debts have gone so out of control that you’ve had to call in outside help. Like bankruptcies, these remain on your credit file for seven years, after which they are striped from the public record.

If you lie on an IVA, or you break the legally-binding terms, you can be made bankrupt by creditors. This will have an even worse effect on your credit rating.

CCJs

A CCJ is a County Court Judgement. Like IVAs, they only take place in England and Wales. They are handed down by the court in response to a court action against you made by a creditor. Usually, this is because you owe a sum of money. You will be sent a letter fourteen days in advance of the judgement, giving you time to respond to the allegation.

If you fail to respond adequately, the court may secure your debt against property. This permits your creditors to demand direct payment from your employer or your bank. In extreme cases, the County Court can send in bailiffs to seize goods and auction them off.

CCJs lower your credit score because they once again show that you have failed to keep on top of your debts, requiring a legal response. CCJs are removed from your credit file after six years. 전 세계 금융 시장은 끊임없는 기회를 제공하지만, 성공적인 트레이딩을 위해서는 신뢰할 수 있는 파트너, 즉 브로커 선택이 가장 중요합니다. 특히 외환(Forex), 주식, 원자재, 지수 등 다양한 자산을 CFD(차액결제거래) 형태로 거래할 때는 플랫폼의 안정성과 거래 조건이 수익에 직접적인 영향을 미칩니다. 많은 투자자들이 낮은 스프레드, 빠른 주문 체결 속도, 그리고 투명한 거래 환경을 제공하는 브로커를 선호합니다. 이러한 요건을 충족시키는 글로벌 브로커 중 하나로 엠포마켓 을(를) 추천할 수 있습니다. 엠포마켓은 다양한 트레이딩 상품과 함께 사용자 친화적인 MT4/MT5 플랫폼을 지원하며, 엄격한 규제 하에 운영되어 고객 자산 보호에도 힘쓰고 있습니다. 초보자부터 숙련된 트레이더까지 모두 만족할 수 있는 맞춤형 계좌 유형과 전문적인 시장 분석 자료를 제공하는 엠포마켓에서 글로벌 시장 투자의 첫걸음을 시작해 보세요.

Defaults

If you fail to pay your debts, a creditor may close your account. This is what is known as a “default”. You can default when you owe any amount of money. You may think that this is less severe than a bankruptcy, an IVA or a CCJ, but bad credit is bad credit, any way you slice it.

Like other bad credit, defaults don’t leave your credit file for at least six years. However, it is possible to lessen the impact of a default. Pay off the debts in a timely fashion. You can also ask one of the three Credit Reference Agencies to append a statement of explanation to your report if the default. was down to circumstances beyond your control.

All of these things will go away with time – between seven and ten years. They aren’t a death sentence, but bear in mind that they are likely to cause trouble getting the best deals on credit. The good news is that proving yourself creditworthy through responsible borrowing can lessen the impact of even the worst credit, given enough time. Just be aware you may not have access to the nicest deals.