Change banks ? BAD banking habits to debt free

Glittery_2

Have been following Dave Ramseys babysteps and next week will be done with Baby Step 2 & 3 on the same day.
That means we will be debt free and have a fully funded emergency fund.
Never in my wildest dreams did I think we would get here.
From over 50k debt, to this.

We have been with Halifax a long time, and been awful.
Bouncing payments and direct debits, maxed out overdraft of £5000, then slowly started reducing it and got it to £2400 (still always maxed out).

So the plan now is to save hard for a house deposit, and get a mortgage next year if possible.
Have checked out equifax and (unsurprisingly) it says score is very poor
Do we
a) stay with halifax and keep our deposit money in the account and hope they discount our previous bad history
close halifax and open an account somwhere else and start fresh?

Whichever account we have it will as of next week have a healthy balance of around £20k which we will add to over the next year and hope to double

Karonher

Overall would you say that Halifax have treated you fairly? If they have you may be better staying with them as you cant be sure about other banks.

I would speak to them and see what they say the chances are.

Glittery_2

Karonher wrote: »

Overall would you say that Halifax have treated you fairly? If they have you may be better staying with them as you cant be sure about other banks.

I would speak to them and see what they say the chances are.

I'd say so yes.
We have been blimming awful,it's not their fault.
We concentrated more on other bills and then other debts than the overdraft.

sourcrates

Glittery wrote: »

I'd say so yes.
We have been blimming awful,it's not their fault.
We concentrated more on other bills and then other debts than the overdraft.

The majority of lending decisions these days are automated, your previous account conduct may be taken into concideration, it may not.


The bank is always more able to take the hit financially, than you are, especially when your struggling, I don`t know if brand loyalty still has any leverage these days, but if it ain`t broke, don`t fix it.

Glittery_2

Good points.
I don't think banks are how they once were,we have about 6 managers that rotator , and just a central call centre number.
So I imagine it isn't up to them, And all automated like you say

BabyStepper

I have to agree, the banks won't really mind what you've been up to, as long as it is all sorted now. As above posters have said, it's all automated. A couple of benefits to holding the same account for a long time, it looks good on your credit score, helpful for mortages, and also when I was looking for balance transfer ccs to shift debt, the bank I was with the longest gave me one quicklest and most easily.

With no debt and £20k in the bank, as long as your credit score is good you can take your pick. Make sure you get a bonus for switching and don't pick an account with fees. Sounds as if you're just a bit embarrassed that the bank know your history - don't be. They won't remember.

kangoora

Is your £20k in interest paying accounts? If not, a transfer to a Santander 123 account may be worthwhile. This pays 1.5% on up to £20k, that would pay you around £25 month interest plus cashback on a lot of household/utility bills (we get about £9/month). There is an account fee of £5 for this however so you really need a large sum in there to offset the £5 fee and make it worthwhile.

Alternatively Marcus Bank is paying 1.4% interest in their savings account on any amount currently so just leave standard monthly expenses going into your existing account and put any surplus into that.

Takmon

BabyStepper wrote: »

I have to agree, the banks won't really mind what you've been up to, as long as it is all sorted now. As above posters have said, it's all automated. A couple of benefits to holding the same account for a long time, it looks good on your credit score, helpful for mortages, and also when I was looking for balance transfer ccs to shift debt, the bank I was with the longest gave me one quicklest and most easily.

With no debt and £20k in the bank, as long as your credit score is good you can take your pick. Make sure you get a bonus for switching and don't pick an account with fees. Sounds as if you're just a bit embarrassed that the bank know your history - don't be. They won't remember.

Using the term "Credit Score" is a bit misleading because most people think of the credit scores generated by the CRA's which are never used as part of any mortgage or credit application.

What they do see is the data on your credit report showing the last 6 years of how you have managed your credit and it's this information that they use when you apply for credit to determine if you are accepted or not.


OP it's good advice to keep the Halifax account open because long term accounts are a positive in credit applications. There is no benefit in closing the halifax account because even if you do they will still keep records of how it was operated because they legally have to keep this for financial auditing reasons. But there is nothing stopping you opening accounts elsewhere in addition to make sure you get the best interest rate on your savings and to help manage your finances.

Glittery_2

BabyStepper wrote: »

I have to agree, the banks won't really mind what you've been up to, as long as it is all sorted now. As above posters have said, it's all automated. A couple of benefits to holding the same account for a long time, it looks good on your credit score, helpful for mortages, and also when I was looking for balance transfer ccs to shift debt, the bank I was with the longest gave me one quicklest and most easily.

With no debt and £20k in the bank, as long as your credit score is good you can take your pick. Make sure you get a bonus for switching and don't pick an account with fees. Sounds as if you're just a bit embarrassed that the bank know your history - don't be. They won't remember.

Definitley is embarrassing, but also want the best chance of a smooth mortgage application.
Hope our credit score changes from Very Poor, maybe we need to take out a card and build our score, or keep our £2400 overdraft but never use it?

Glittery_2

kangoora wrote: »

Is your £20k in interest paying accounts? If not, a transfer to a Santander 123 account may be worthwhile. This pays 1.5% on up to £20k, that would pay you around £25 month interest plus cashback on a lot of household/utility bills (we get about £9/month). There is an account fee of £5 for this however so you really need a large sum in there to offset the £5 fee and make it worthwhile.

Alternatively Marcus Bank is paying 1.4% interest in their savings account on any amount currently so just leave standard monthly expenses going into your existing account and put any surplus into that.

Thank you for this info!
Santander was one of the banks recommended for self employed mortgages.
So may be helpful having the cash in there and adding to it over the next year

Glittery_2

Takmon wrote: »

OP it's good advice to keep the Halifax account open because long term accounts are a positive in credit applications. There is no benefit in closing the halifax account because even if you do they will still keep records of how it was operated because they legally have to keep this for financial auditing reasons. But there is nothing stopping you opening accounts elsewhere in addition to make sure you get the best interest rate on your savings and to help manage your finances.

This is what I think we should do, thank you.

Hope that one year of good behaviour and doubling savings from 20 -40k Will offset our terrible past