• How Does a Trust Deed Affect My Credit File?


How Does a Trust Deed Affect My Credit File?

Trust Deed and Credit File

A Trust Deed will have an impact on your credit score for a duration of six years from the commencement date of the deed. This could potentially complicate future attempts to secure credit, such as a mortgage or a loan.

Maxine McCreadie
Maxine McCreadie

1st November 2018


A Trust Deed is a legally binding debt solution designed to help you repay a portion of your unsecured debt and make a fresh start with your finances. When you come to the end of your arrangement, any remaining debts will be written off and you’ll be free to move on with your life.

Trust Deeds are only available in Scotland and are commonly referred to as the Scottish equivalent of an Individual Voluntary Arrangement (IVA). They typically last four years but your term can be extended if your circumstances change.

In this article, we’ll outline everything you need to know about how a Trust Deed affects your credit rating, including what happens to your credit file after your Trust Deed is complete and how long a Trust Deed stays on your credit file.

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What is a Trust Deed?

A Trust Deed, or Scottish Trust Deed, is a formal debt solution designed for people who are struggling with unsecured debt and can afford to make regular payments towards what they owe over a set period (typically four years).

Trust Deeds are legally binding and can only be managed by a licensed Insolvency Practitioner (IP). Their role is to conduct a review of your income and expenditure, distribute your payments among your creditors (the people you owe money to), and look after your financial affairs.

Once you’ve made your final payment, you will be discharged from your arrangement and any remaining debts will be written off, meaning you won’t be asked to make any more payments towards what you owe and can start afresh with your finances.

If more than 50% of your creditors or the creditors to which you owe a third of your debt agree to your Trust Deed, it will become a Protected Trust Deed. This means your creditors won’t be able to contact you, take legal action against you, or add further interest or charges to the debt.

What is a credit rating?

A credit rating is a three-digit figure that determines your ‘creditworthiness’, which is your ability to make payments in full and on time. Generally, the higher your credit score, the higher your chance of being approved for credit.

They are calculated by credit reference agencies, which are independent organisations that hold data on your financial affairs, including your credit applications, accounts, and debts. Experian, Equifax, and TransUnion are the main credit reference agencies in the UK.

The main aim of a credit rating is to let lenders know how much of a risk you’re likely to pose based on your past credit history. They will then use this information to control their risk and decide whether to let you borrow money.

However, while entering into a Trust Deed shows you are taking responsibility for your debts, it also highlights to lenders that you’ve failed to keep up with repayments in the past and could potentially default on future credit agreements.

Which factors can negatively impact my credit rating?

Maintaining a healthy credit score is crucial to helping you improve your financial situation – especially if you’ve recently been discharged from a formal debt solution like a Trust Deed.

Some of the main factors that can negatively affect your credit rating include:

  • Not being registered to vote at your current address
  • Having a sparse credit history (lenders can’t be reassured you’re low-risk if you have little to no credit history)
  • Having late or missed payments on your credit file
  • Having a large amount of outstanding debt (this suggests that you may not be able to pay back any future credit)
  • Having a recent court order or debt solution on your credit file
  • Making several credit applications within a short space of time (this indicates that you’re overly reliant on credit)
  • Having too many outstanding balances
  • Exceeding your credit limit on existing credit agreements

Remember, while various things can negatively affect your credit rating, it will naturally improve over time and there are plenty of things you can do to gradually improve it over time.

Will a Trust Deed affect my credit rating?

Like most formal debt solutions, a Trust Deed will have a negative impact on your credit file as it signifies to lenders that you’ve struggled to manage a credit agreement in the past and could potentially be a risky borrower.

However, it’s important to remember that while credit ratings tend to decline after entering into a Trust Deed, the missed payments or defaults that led to you requiring a Trust Deed will have already damaged your credit score.

Furthermore, a Trust Deed will only be visible on your credit record for six years from the date your arrangement was approved. After this time, your credit score will naturally improve and you should have no problem borrowing further credit, including a mortgage or a loan, if necessary.

What will happen to my credit file after my Trust Deed is complete?

Once you have successfully completed your Trust Deed, any remaining debt will be written off and you’ll be free to start afresh with your finances.

However, while you’ll be free to move on with your life, your Trust Deed will appear on your credit file for an additional two years after completion and you may still find it difficult to get approved for credit.

You should have no problem successfully applying for credit after your Trust Deed has been removed from your credit file, but you should still limit credit applications where you can to avoid further damage and, more importantly, future debt problems.

How long will a Trust Deed stay on my credit file?

A Trust Deed remains visible on your credit file for six years from the date your Trust Deed begins.

Once you’ve met all your obligations and successfully completed your Trust Deed, your creditors should inform the credit reference agencies that your debt with them has been ‘satisfied’ or ‘settled’.

However, while it will still be difficult to obtain credit in the two years after your Trust Deed ends, it isn’t impossible and you may have more luck with specialist lenders.

For example, you’ll no longer have any outstanding unsecured debt and will be in a position to start rebuilding your credit rating again. Lenders and financial institutions will also be able to see that you’ve completed your arrangement and are capable of sticking to a regular payment schedule which can improve your chances.

Once you’ve been discharged fully, it is a good idea to check your credit file to ensure your creditors have updated it to reflect your Trust Deed and that the information they hold about you is accurate. You can also do this by sending credit reference agencies a copy of your discharge certificate.

It’s not your Trustee’s responsibility to update your credit file and it may not be done automatically by your creditors. By checking your credit record after a Trust Deed, you can ensure it’s an accurate reflection of your financial situation.

Are you considering a Trust Deed?

How much debt do you have?

How can I rebuild my credit file after a Trust Deed?

Seeing your credit score drop after you enter a Trust Deed can be worrying, but it’s important to remember that it will only be damaged temporarily and will gradually improve as you pay off your debt over time.

Here are some of the ways you can build your credit back up after a Trust Deed:

  • Register to vote at your current address
  • Check your credit file for errors and report them to the relevant credit reference agency as soon as possible
  • Limit your credit applications
  • Apply for a credit card with a low interest rate
  • Make payments in full and on time

Remember, improving your credit score is a gradual process that requires time, effort, and patience and results shouldn’t be expected overnight.

Additionally, having your credit file negatively impacted is only a small negative compared to the benefits of entering a Trust Deed. The biggest positive is that after four years, all your remaining unsecured debt will be written off and you’ll be free to rebuild your finances.

Here’s an example of how a Trust Deed can help

Let's say you owe...

Bank Loans


Short Term Loans


Phone Bills


Credit Cards


Store Cards


Payday Loan




Total amount owed:


Customer monthly repayments before and after entering a Trust Deed

Repayments reduced by 70%

Monthly payments are based on individual financial circumstances

Will a Trust Deed impact other areas of my life?

When you enter into a formal debt solution like a Trust Deed, it’s important to consider how it will impact other areas of your life in addition to your credit score.

For example, if you work in certain key sectors, such as legal, financial, or the law, your employment contract may include a clause that prevents you from being insolvent. Failure to find this out before starting your arrangement could lead to you losing your job and being forced to find alternative employment elsewhere.

For a Trust Deed to become protected, you must also transfer your assets (car, home etc.) to the Trustee managing your arrangement. You will usually be able to keep basic household items or items you reasonably need, like a car, if it’s worth less than £3,000.


Entering into a formal debt solution will always have a negative impact on your credit score and make it difficult to get approved for credit, and a Trust Deed is no different.

However, your credit score will only be damaged permanently as long as you stick to the terms of your arrangement and make payments as agreed. There are also various things you can do to improve your credit score during and after your arrangement.

By taking steps to improve your credit score after a Trust Deed, you can prove to lenders that you’re capable of handling your finances responsibly and increase your chances of being approved for further credit.

Maxine McCreadie
Maxine McCreadie

Maxine is an experienced writer, specialising in personal insolvency. With a wealth of experience in the finance industry, she has written extensively on the subject of Individual Voluntary Arrangements, Protected Trust Deed's, and various other debt solutions.

How we reviewed this article:


Our debt experts continually monitor the personal finance and debt industry, and we update our articles when new information becomes available.

Current Version

November 1 2018

Written by
Maxine McCreadie

Edited by
Ben McCormack

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