Trust Deeds, the Register of Insolvencies and Credit Ratings
As an insolvency solution, Trust Deeds are entered onto the Scottish insolvency register. This is called ‘The Register of Insolvencies’. This register is accessible online and free to search. The information that is available is your:
- Date of Birth
- Trustee Details
- Start Date
- Discharge date
- Discharge date
For many people, this represents a security risk. It is important to note, however, that the insolvency register is not linked to search engines. It is designed not to appear as a result when typed into Google, Yahoo, or any other search engine.
The greater issue with the insolvency register, is that credit rating agencies use it to add to your credit file. Your credit file is a file of information about your credit habits. It can include a huge variety of information, such as your debt repayments, your mortgage, and many other financial factors. This helps to determine your Credit Score, and this is what creditors use to determine how trustworthy you are when they offer you credit, which determines things like interest rates.
If you have never taken out any sort of credit, or had your name on a lease or a utility bill, you will not necessarily have a good credit score. Having a good credit score is about proving you can manage and pay back your debts. As such, you also won’t have a good score if you regularly fail to pay your debts. Many people considering Trust Deeds already have poor credit scores.
By having your details on the insolvency register, it will become more difficult to take out affordable credit. This means that if you are planning on taking out further credit, a Trust Deed may not be suitable for you. However, Trust Deeds are also a long-term solution for poor credit scores as a result of debt. At the end of your Trust Deed, the remainder of your unsecured debts are written off, this means they will no longer be present on your credit file as active, unpaid debts. As well as this, your details are only held on the insolvency register for six years from the beginning of your Trust Deed. This means that, after six years, you can start to properly rebuild your credit score.
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