How to get back on the credit ladder

never-in-doubt

How do I get back onto the Credit Ladder?

Lots of people wonder how it is possible to get onto the credit ladder if, for instance, they have had adverse data registered against them or have just turned 18 or have never had a requirement for credit in the past - whatever the reason, one question remains outstanding which is 'how can I get onto the credit ladder'?

Interesting question when you consider that most lenders seem to have the same criteria in that you need credit history to build up a credit rating - how is this possible when no-one seems to give you that 'lucky break' and offer you credit in the first place?

This thread will offer guidance on not only how to get your feet back onto the credit ladder, but also advise the best lenders to try so you're not wasting searches unnecessarily. The companies mentioned have all been tried and tested and there are numerous posts throughout this site, not forgetting Proliants Sub Prime Credit Card thread which is a great read for any newbie's to the site.

To start off, we have to break this thread down into sections as follows:

1. The Basics

2. New to credit

3. Clean Credit File - Adverse Data in the Past

4. Soiled Credit File - Currently Have Adverse Data Registered

5. Appeal Letter

The links above will take you directly to the relevant post and should help you get back onto the credit ladder in no time at all. Feel free to post any questions; I'm sure there will be loads of willing volunteers to help you out.

Good Luck!

never-in-doubt

The Basics

Contrary to popular belief, it is possible to get credit even when you think you’re wasting your time applying. Granted, not all lenders will see you in the same light so you need to play the game and apply to the lenders that are prepared to give you a chance. If you have a bank account the first choice should always be your bank as they may use behavioural scoring which may approve you.

Due to the higher level of risk involved, the credit limits usually start smaller and the APR will be higher but remember, you are only going to use and abuse these accounts until you build up a credit history afterwhich you’d be looking to start applying to the mainstream providers such as the leading banks and financial institutions that offer a whole range of colourful cards & higher limits!

So, where do you start? This is the easy part; no matter what your background you will almost certainly be able to apply for one of the accounts in the sections that follow, with the likelihood of acceptance being slightly higher than if you went and applied to your typical credit card provider.

The first thing to remember is that credit is a luxury, it is not a right and no-one is automatically entitled to credit; similarly the credit provider is not obliged to tell you the exact reasons as to why you were declined – they do, however, have to give you the basis which will usually be one of the following:

1. Failed to reach their credit score/criteria acceptance level
2. Adverse data received from credit reference agency
3. Fraud Prevention

Lets assume you get declined for option 1. This can be appealed using the Template Letter and sending additional information. Options 2 or 3 would really mean you need to get a copy of your credit files, prior to applying as depedant upon what data is registered will have a huge impact on any positive decision for credit.

never-in-doubt

New to Credit

Lets assume you're brand new to credit, either you've never needed credit before or you're young and want to try it for the first time; whatever your reason to wanting to apply you're more than likely to be accepted so long as you ensure that the following is in order:

1. You are on the Electoral Register
2. You do not have any adverse credit
3. You have checked your credit reports (all 3 of them) recently

If the above sounds familiar then there is no real reason that stands out why you'd be rejected a credit based facility from one of the leading sub-prime providers. Now you have to ask yourself the following:

1. I have a bank account
2. I do not have a bank account

If you do have a bank account then it is always recommended that you try your own bank first as most banks now run what is called behavioural scores which is like an internal credit score.

If you do not have a bank account, for whatever reason, this is the first thing you need to sort out before applying for a credit based facility as your chances will be almost zero if you do not even have a basic provision for basic banking.

Therefore, the best way to go forward would be to get yourself a bank account and then consider one of the sub-prime credit cards such as Vanquis or Aqua.

If you feel you want to start lower, then look into getting a catalogue - so long as you aren't dripping with defaults; J D Williams Group is a great starter catalogue.

never-in-doubt

Clean Credit File - Adverse Data in the Past

If you've had adverse data registered against you in the past but your file is now clean (after 6 years) then the most suitable products would be as follows;

Credit Cards;

1. Vanquis
2. Aqua
3. Capital One
4. Barclaycard
5. Monument
6. Sygma Bank (FlyBe)
7. Tesco
8. RBS

All the above credit card providers give varying limits ranging from £200 - £3000+ depending on your individual circumstances. If you get rejected for one card, don't be put off just try another but don't get happy with the apply button because too many searches are a bad sign and show desperation to potential lenders. It is best to stay within 6 searches in a 6 month period with a maximum of 10 in any 12 month period.

Bank Accounts;

1. HSBC Current Account
2. Citi Bank
3. Barclays Bank
4. HBOS
5. Lloyds Tsb

These providers all offer a Basic Bank Account if you fail the score for a full account and they all offer a Visa Debit Card with their Basic Accounts with the exception of Citi who do not offer Basic Banking, but their normal accounts are very good, apparently. It is also worth considering getting a catalogue or two, the green 0's on your credit report all add up and it does no harm getting a catalogue, even if you never use it. A selection of 'easy to get' catalogues are listed below;

Catalogues;

1. J D Williams Group
2. Shop Direct Group
3. Next

These catalogues range in status dependant upon your individual circumstances, for example JD Williams will almost certainly offer a £125 start limit whilst Littlewoods/Empire (SDG) generally offer £500 starting limit with their accounts. Next is for the more exclusive with a good credit file, ideally people with a bank account and one long standing credit card.

StoreCards;

1. M&S Chargecard
2. Debenhams Account

The above list is not exhaustive but based on the general feeling amongst MSE users and acceptability prospects. Remember, you are not guaranteed credit and if you get declined, try appealing using the Template Letter - you never know, for the price of a stamp it could well be worth it...

never-in-doubt

Soiled Credit File - Currently Have Adverse Data Registered

If you've currently got adverse data registered against you, it's worth remembering some lenders will still allow you credit. Try to get a catalogue first of all as J D Williams Group are generally quite lenient and offer most people a starting limit of £125. If you feel you'd rather apply for a credit card, the first card of choice should be a Vanquis card, again expect a small start limit of around £250.

If you do not have a bank account then discount the above and consider applying to get a bank account. It is worth noting that so long as you don't have any fraud related entries registered against you that all banks should be able to offer you a Basic Bank Account, some are better than others as they come with a Visa debit card and not Solo/Electron.

In order to obtain a Basic Account, it is best to go into the bank and apply in person. Some will ask that you apply for a full account and if they refuse you, they may be able to offer a Basic Account - this is perfectly normal and should be expected. The best Basic Accounts come from the following banks;

1. HSBC Current Account
2. Barclays Bank
3. Lloyds Tsb

Lets assume you have a bank account already, or have been accepted for one it is worth considering that more and more banks are now reporting conduct of basic accounts to CRA's using the term 'full bank account' which is great for you, the customer.

So, the best credit cards would really be the main Sub-Prime ones such as;

1. Vanquis
2. Aqua
3. Capital One
4. Barclaycard
5. Monument

Regards to catalogues, it's hard to say who will accept you but its definitely worth trying J D Williams Group. If you notice a pattern evolving of declines then it may be worth actually getting a copy of your credit files; details found here.

At the end of the day, if you get one account it is a start and it's the first step back onto the credit ladder, however you look at it. One secret to remember, if you want faster credit limit increases is to pay a little off each month via Direct Debit (minimum payment amount) but also send over some extra funds, even an extra 30 pounds per month shows good risk and the more you use your account then your odds for greater limits and availability with mainstream lenders improve dramatically.

never-in-doubt

Appeal Letter

The appeal letter can be found in its entirety here: Been Declined - Appeal Letter. The appeal letter is formed using various elements to create the actual appeal. The various sections of the appeal letter are as follows:

Section 1 - Main body of letter

Section 2 - Financial details / current liabilities

Section 3 - Address Details

Section 4 - Previous Address

Section 5 - Adverse Data on Credit File

Just copy and paste the elements into a Word document and personalise it, then send it off usually with at least a bank statement and utility bill, full list is found here: What I.D to send with Appeal.

Remember when you appeal you are asking the lender to reconsider their original decision so spend time making the letter specific to your circumstances and be honest. Pointless lying because the lender may well write back requesting pay slips or something else that could catch you out. Any appeal made will be looked at by an underwriter who have the authority to overturn the original decision.

never-in-doubt

Additional Information

To get a copy of your credit record, simply send a cheque/postal order for £2 payable to the agency and send this with details of your full name, address history for the last 6 years and I.D to confirm your identity.

Credit Reference Agencies(CRA's):

1. Experian
2. Equifax
3. Call Credit

The Fraud Prevention Agencies do not hold credit related data about us. In order to view the data they hold about you, you have to issue a SAR to them with payment of £10 (see below).

Fraud Prevention Agencies (FPA's):

1. CIFAS
2. Experian Data Analytics
3. Synectics Solutions
4. N Hunter

It will be necessary, on ocassion to issue a Subject Access Request to the Credit or Fraud Agencies. This is perfectly normal, just remember they have a time limit of 40 days in which to respond - this is ICO guidance, not their own. Full details of SAR including Template Letter can be found here. For information on the useful relevant legal authorities; see below:

1. Information Commissioner's Office (ICO)
2. Data Protection Act 1998 (DPA)
3. Freedom of Information Act 2000 (FOI)
4. Financial Ombudsman Service (FOS)
5. Financial Services Authority (FSA)
6. Money Made Clear

In order to utilise the useful resources on this topic; the following links should help you learn all you need to allow you to start climbing the credit ladder:

1. Consumer Action Group Forum
2. Which - Credit Score Explained
3. MSE - Credit Rating & How it Works
4. Money Made Clear
5. Sub Prime Credit Card

skyrider007

Don't forget there is an MSE article on Credit Rating written by Martin.

http://www.moneysavingexpert.com/banking/credit-rating-credit-score

never-in-doubt

skyrider007 wrote: »

Don't forget there is an MSE article on Credit Rating written by Martin.

http://www.moneysavingexpert.com/banking/credit-rating-credit-score

Hi this isn't a credit rating thread, its more a how to get credit thread with specific links to lenders but thanks for that link, its handy to have on here!

skyrider007

never-in-doubt wrote: »

Hi this isn't a credit rating thread, its more a how to get credit thread with specific links to lenders but thanks for that link, its handy to have on here!

I just thought they are very similar. But hey, if you've got time on your hands, who am I to stop you? I find your other thread on appeal letter template quite useful since there are not many of those around.

p.s. tips on 'getting on the credit ladder' are widely discussed in the sub-prime credit thread but I accept that your thread makes things simpler for people who don't want to skim through the whole hundred pages of that thread

never-in-doubt

skyrider007 wrote: »

I just thought they are very similar. But hey, if you've got time on your hands, who am I to stop you? I find your other thread on appeal letter template quite useful since there are not many of those around.

p.s. tips on 'getting on the credit ladder' are widely discussed in the sub-prime credit thread but I accept that your thread makes things simpler for people who don't want to skim through the whole hundred pages of that thread

Hiya

Thats exactly my thoughts.... put everything together in one thread with actual links and suggestions of tried and trusted lenders that do give credit. I have linked to the sub prime thread, its one of the best on here and agree its useful - very useful.