Clean slate or valuable history?

600sqn

Sat here with my friend tonight talking - he’s been unemployed for 9 months due to a major operation and in turn got into financial difficulty.

He’s okay now and just got back into work.

A year ago he opened his Barclays account but for the last 9 months it’s been in and out of an unauthorised overdraft, but now his financial circumstances have improved - would it be more beneficial to close down the Barclays account and open up elsewhere - have a clean slate with a new bank, or would it be better to remain at Barclays and let them see his situation has improved.

He’s also thinking about improving credit score. He was looking at Santander for a new act, but I think that staying with Barclays would be better as longer you’ve had the account is what they often look at isn’t it?

radoslaff

Well, the damage that's been done has already been done. It won't really matter if he changes banks, at least from the credit file point of view and it's always better to have a long lasting account. On the other hand with Barclays it's always worth it (if not a must) to have a backup account with a different bank. And besides, he doesn't need to worry about the credit score number, all he needs to worry about is improving his credit history.

System

It will depend if Barclays have put late payment markers or similar on the person's credit file. If not, then moving wouldn't transfer the bad historic data - it would only remain in Barclay's systems.

Ordering credit files would help determine his next move.

Anthorn

600sqn wrote: »

Sat here with my friend tonight talking - he’s been unemployed for 9 months due to a major operation and in turn got into financial difficulty.

He’s okay now and just got back into work.

A year ago he opened his Barclays account but for the last 9 months it’s been in and out of an unauthorised overdraft, but now his financial circumstances have improved - would it be more beneficial to close down the Barclays account and open up elsewhere - have a clean slate with a new bank, or would it be better to remain at Barclays and let them see his situation has improved.

He’s also thinking about improving credit score. He was looking at Santander for a new act, but I think that staying with Barclays would be better as longer you’ve had the account is what they often look at isn’t it?

Overall, getting into financial difficulty and then recovering should count in your friends favour but the major question is does your friend's bank apply the same principle? More importantly, will the bank apply constraints because your friend was in financial difficulty even though they have now recovered? The only was to find out the latter is to keep on using the account and make some sort of application to the bank perhaps for credit.

6 of one and half a dozen of the other: The existing bank may apply constraints due to the financial difficulty of the past but a new bank is likely to apply constraints because it's new. In addition getting a new bank account is likely to affect the whole credit history due to the lack of longevity of the account.

So overall, stick with the same bank for now and build up the credit history using credit accounts from other sources. If pushed into it get an additional bank account.