Credit if no income but pension draw down

gaskellp

I've recently taken the decision to take early self funded retirement (aged 51) and am fortunate enough to have significant ISA investments taken over the past 30 years - these are now helping to fund my current lifestyle. My pension only kicks in at age 55 (4 years away). I own my own home - approx value £250k (mortgage free) and my credit core thru Experian is 999/999. Never been in debt. Problem I now have is despite all of the above and doing the right things all my life, I am now struggling to get any credit whatsoever. As their archaic systems are saying I must be "unemployed" with no income. Latest was trying to get a 0% interest free deal on a phone - DECLINED - even though I could buy the phone outright 100 times over. So although I am one of the extremely fortunate ones it seems now that my life is over from a credit perspective (cars, phones etc). Any suggestions???

System

0% interest deal so I'm taking it that that was in a store. You can save not only what you'd lose in interest but considerably more buying online. When I bought my Samsung Galaxy S7 last year it was £620 in the stores but £550 online.

As you've found out your credit score is meaningless for saying whether or not you'll get credit.

Suggestions? The problem is you have no credit on your file so lenders have no way to judge how you'd repay borrowing. So you need to address that. Get a credit card, any card doesn't matter what the interest rate is or what the maximum amount they'll give you is and do all your normal spending on it setting up a direct debit to clear the balance in full every month. Personally I'd steer towards cards that give you something for using them such as cashback, Nectar Points or Airmiles if you fly.

You want a credit card anyway regardless of whether you need the credit or not because anything worth £100 or more where even a quid of that is put on the credit card benefits from Section 75 protection. What that is is Section 75 of the Consumer Credit Act which makes lenders equally liable with retailers so if you buy something £100 or more, put some or all of it on the credit card, something goes wrong and the retailer doesn't play ball you can go to the credit card company.

Congrats on reaching FIRE. I wish I'd known what I know now when I was 18 or even 28. I'd have been a hell of a lot further down the path.

gaskellp

Thank you Tarambor, yes I do have a virgin credit card and Amex card and everything goes on it (maybe £600 per month) and balance settled in full. So, just not sure what else I can do as it is the zero income that is going against me. I’ve had lots of car pcp deals in the past 10 years and so from a credit perspective I must have a first class history. Problem is their systems have not been able to catch up with a generation who have done the right thing and are in the extremely fortunate position to retire early before pensionable age. For all intents and purposes they are treating me as unemployed. Help???? When my next pcp deal is up for renewal I know I will have problems despite me having an impeccable payment history. It's a complete joke!!!

sourcrates

gaskellp wrote: »

Thank you Tarambor, yes I do have a virgin credit card and Amex card and everything goes on it (maybe £600 per month) and balance settled in full.

And therein lies your problem, if you settle in full each month, you are not going to make the creditor any profit.

Seriously, if you are that well off, you don't need credit, or to have to jump through hoops like this, i`d say stuff em.

Shakin_Steve

sourcrates wrote: »

And therein lies your problem, if you settle in full each month, you are not going to make the creditor any profit.

Seriously, if you are that well off, you don't need credit, or to have to jump through hoops like this, i`d say stuff em.

Agreed. Count your blessings.

tenchy

But they wouldn't be making anything on a 0% deal anyway. No, seems to me there's some sort of fundamental problem with the way credit works in this country.

gaskellp

Totally agree Tenchy - it's a complete joke and quite honestly beyond belief. I'm now 51, totally financially independent and fortunate enough to have saved all my life for retirement. I am mortgage free with zero debts. I have an Amex card with £600 expenses per month - paid in full. My investments deliver enough monthly interest to pay the bills and tick over nicely. I have an Experian credit score of 999/999. All that means no chance of credit from now on until the day I die because I am technically "unemployed" with no income. Can someone please explain this crazy situation.

StopIt

gaskellp wrote: »

Totally agree Tenchy - it's a complete joke and quite honestly beyond belief. I'm now 51, totally financially independent and fortunate enough to have saved all my life for retirement. I am mortgage free with zero debts. I have an Amex card with £600 expenses per month - paid in full. My investments deliver enough monthly interest to pay the bills and tick over nicely. I have an Experian credit score of 999/999. All that means no chance of credit from now on until the day I die because I am technically "unemployed" with no income. Can someone please explain this crazy situation.

It's because the CRA systems aren't psychic, and thus, can only rely on their own algorithms for risk management.


Because credit risk is based on credit history as a starting point, but going forward they rely on employment status, and they have no access to your investments, officially to them you're a high risk because you're currently not in employment, with no recorded income source that they know of. Once you officially receive your pension, your credit risk will bounce back again and you will find that you likely wont be declined for credit again.


It's the price of financial privacy. I'm sure you don't want to tell the CRA systems of your financial history, and the price of that is them treating you as someone with a high risk of non payment.


You've already stated you can afford this without credit, and you have an Amex that can cover it (And presumable get you reward point for doing so), so go SIMO and save some pennies that way.