Can I get a bank account after a DRO?

6 June2012

A Debt Relief Order (DRO) - though it may be a good route out of debt for people with a low available income and few assets - will have a negative impact on your credit rating for six years.

A poor credit rating may cause a number of issues. For example, if your credit rating is poor you may find it difficult to obtain further credit, or even a bank account.

Why does a DRO affect my credit rating?

The requirements for a DRO are very specific, but if you do qualify, your unsecured debts will be frozen for a year, and will be (if your finances haven't improved sufficiently) written off altogether once your DRO comes to a successful conclusion.

Click here to see whether you're eligible for a DRO.

Entering a DRO stays on your credit record for up to six years - potential lenders will know that you did not repay your debts and had to have them written off.

Which bank accounts can I get after a DRO?

When you apply for a conventional current account, banks will commonly carry out a credit check on you. If your credit is too poor, they may decline your application.

This may cause people to think that they can't get a bank account after a DRO - but this isn't usually true.

There are bank accounts out there that are available to people who are in (or have just finished) a DRO - and other people who cannot obtain a current account. These accounts are often referred to as 'basic' bank accounts.

What is a basic bank account?

A basic bank account has many features of 'normal' current accounts. For example, they often offer a debit card - or a prepaid cash card - so you can withdraw cash and pay for items and services in-store or online. These accounts can offer online banking and let you pay your bills by Direct Debit (which may get you a discount).

There are a couple of differences, however. For example:

  • Many basic bank accounts do not carry out a credit check. No matter what your credit rating is like, you will probably be offered one.
  • They do not have an overdraft facility. Some people may see this as limiting, but if you have struggled with debt in the past it may be reassuring to know that you cannot accidentally go overdrawn.

Basic bank accounts don't just appeal to those with poor credit. Some people just appreciate the simplicity, and the fact that they won't be hit by unexpected bank charges.

Find out more about basic bank accounts here.

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Tags: debt relief order, DRO, debt, credit rating, unsecured debts, bank, bank account, overdraft

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