The consequences of bad credit will stay with you for some time. A repossession is something that many mortgage lenders don’t like. But how long does a house repossession stay on your credit report in the UK?
How long does a house repossession stay on your credit report UK? A home repossession will remain on your credit report for 7 years. But after this time and so long as there are no other delinquencies on your credit history, your credit status will become positive again. During the period where your credit report is affected by a repossession, you’ll struggle to obtain credit.
If whilst your credit report is marked with a repossession and you manage to obtain credit, it’s likely to be on unfavourable terms. Which means if you manage to obtain credit, you’ll end up paying a higher interest rate, as you represent a higher risk.
Banks and other lending institutions make lending decisions based on how great a risk you represent in terms of defaulting on a loan. The worse your credit report is, the greater the risk of default.
How does repossession affect your credit rating?
Not only does repossession mean that you lose your home, but it will have a detrimental effect on your credit rating.
The effect of being repossessed will stay with you for some time. It will affect you both in the short term and in long term.
For example, having a bad credit rating will not only affect getting a mortgage in the future, but it will also impact on whether you can be a tenant. Most landlords carry out credit checks on tenants. So if you have a bad credit report, this may affect your ability to be accepted as a tenant.
That means you should try your utmost to avoid repossession in the first place.
How long will repossession stay on my credit report?
Your repossession will likely remain on your credit report for seven years in the UK. The seven years start to run from the first missed mortgage payment that led up to the repossession status.
This will mean that whilst the repossession is on your credit history, you’ll struggle to obtain credit, open a bank account, obtain a tenancy to rent a home or even obtain insurance.
Having said that, so long as you start to repair your credit file by maintaining a good credit history, you will begin to build a good credit history once more.
As a consequence of this, within about three-four years you may be able to get another mortgage after being repossessed.
However, due to the fact that the repossession will still show on your credit report after 3-4 years, any credit you obtain is likely to be on unfavorable terms. This includes a getting another mortgage.
This means that any borrowing may be at higher rates of interest. Or you may not be able to borrow as much as you’d like to.
All lenders, or landlords for that matter, assess the risk of how likely a person is to default on the loan or on their rent.
If you have adverse credit in the form of a repossession, County Court Judgments (CCJ’s), missed or default payments, arrears or bankruptcy, you are less likely to be able to borrow money or become a tenant.
Can you remove a repossession from your credit report?
Once you’ve been repossessed the bad mark for this will remain on your credit history for the full 7 years.
This bad mark cannot be removed from your credit report. But instead the bad mark has to run its time.
This is why you are better off preventing a repossession. Please read on to see how this is still possible.
How to help build your credit score
Whilst it may take seven years for your repossession to be removed from your credit report. You can help your credit history by being proactive.
You can re-build your credit report much faster by being proactive in the following ways:
Keeping up with your payments
Keeping on top of your payments for your credit cards. Paying any loans you have on time. Plus also making sure you pay your utility companies on time.
All of these are crucial in quickly building your credit report again.
Reduce the amount of debt you have
If you are able to reduce the amount of debt you have this will help to build your credit history. Making sure you pay down your credit cards and on time.
Where possible it’s a good idea to pay more than just the minimum amount each month too.
Setting and keeping to a budget
Where you’ve got into trouble before, is something you need to avoid in the future. If you set a budget of what to spend each week or month, this will help you to manage your money much better.
If you manage your money, you are better placed to make sure you keep on top of loan payments, credit card payments and other important bills and utilities.
Stop the repossession before it happens
Prevention is always better than cure. Taking action before the repossession occurs is crucial. This will prevent you from having any long-term bad credit report in the first place.
If you are already behind on your mortgage payments, this will affect your credit report, but it won’t be nerly as bad as being repossessed.
But if you act fast, you can stop your repossession in its tracks.
To find out more about how you can stop your repossession, please contact us today.
By doing so, you may still come out with some money from your home, take control and your credit report will be protected too.
But if you leave it to your mortgage lender and to the courts, you’ll lose your home, your dignity and your credit rating will be ruined for some time to come.
I hope you’ve got something from reading this article on how long does a house repossession stay on your credit report UK
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