Rebuilding Credit Post Bankruptcy

Fighter1986

Thought it might be a good idea to start a thread about who can help us rebuild our credit files post bankruptcy.

Of course I'm sure once we've dealt with our debts we'd like to bring our financial standing back to prosperity so that in future we can benefit from good mortgage, loan, credit card and other such deals when the moment suits.

One key to this is maintaining a small number of impeccably ran accounts for a long time, e.g. a single bank account, credit card, and mobile contract. 

Stability is a big factor in credit scoring - time with bank, employer, at address, etc. 

So who can help us to begin rebuilding our credit histories?

I opened a Monzo account mid-bankruptcy which I've used for my everyday bank account and I love it. The only let-down is that they don't report to Equifax, and have no plans to in the future. My Equifax file shows no bank account on it. I've therefore applied to Nationwide and been offered FlexBasic. I'll attempt to upgrade to FlexDirect in a year.

I'll keep Monzo open for overseas use.

As for obtaining a credit card, I had these results, in order of submitting applications

(NOTE: IT IS A BAD IDEA TO SUBMIT THIS MANY APPLICATIONS IN QUICK SUCCESSION. These many footprints will degrade my credit score for six months)

Capital One: No.
Aqua: Offered card, 49.9% APR, but "Need to run further checks".
Tesco Foundation: Offered card, 39.9% APR, but "Need to run further checks".
Tandem Journey: Offered card, £150 Limit, 39.9% APR.
Vanquis: Not applying out of principle.

Truth be told, only one credit card is required for effective credit rebuilding, if the Tesco and Aqua cards come through I'll probably end up cancelling them under the 14 day right to cancel, or leave them in the back of a drawer until they end up being closed for lying dormant. By the time that happens, they'll have left a nice chunk of positive credit history on my report.

I think the "Further checks" messages appeared after being approved due to the fact Experian still have a Notice of Correction on my file. TransUnion who Tandem search don't have any Notices of Correction for me.

I'm just going to leave well alone for a year now and see how things have improved after that.

Best of luck to everyone else!

[Deleted User]

Unused cards will have no impact on building a positive credit history. 

Any card that you get, make sure you use them and clear in full each month. If you can get at least a couple, all the better.

Ignore any changes in your credit score while you rebuild your history.

Fighter1986

Deleted_User said:

Unused cards will have no impact on building a positive credit history. 

Any card that you get, make sure you use them and clear in full each month. If you can get at least a couple, all the better.

Ignore any changes in your credit score while you rebuild your history.

...You're almost right, but the date on which an account was opened can contribute towards creditworthiness. Lenders look at the average age of your accounts and how old your oldest account is, so even if there's no repayment history, just the presence of an old account that's still open can contribute favourably in some credit scoring models.

Absolutely, I've set up a direct debit for the full statement balance as part of the application process.

And absolutely, the fanciful scores that credit reference agencies sell consumers (CreditExpert especially, absolute rip off) aren't often representative of how a lender is likely to see a consumer, and we should certainly never pay to see this number. 

One way we could track our creditworthiness is by way of actual lenders soft searches - for example, seeing what bank accounts Nationwide offer, what rates Zopa / RateSetter / LiveLend / Lendable / et. al, offer, and such forth. These comapnies all provide soft searches and actual results based on their own credit scoring model, so could be a better way of tracking one's creditworthiness. 

Fighter1986

Also, just noticing your username. Awesome.
Fun Fact: Did you know that Clive Sinclair saved money in parts for the Spectrum by buying bad RAM chips and only enabling half of the rated capacity? This is why the 48K spectrum actually contains 64K worth of RAM chips  

[Deleted User]

Fighter1986 said:

Deleted_User said:

Unused cards will have no impact on building a positive credit history. 

Any card that you get, make sure you use them and clear in full each month. If you can get at least a couple, all the better.

Ignore any changes in your credit score while you rebuild your history.

...You're almost right, but the date on which an account was opened can contribute towards creditworthiness. Lenders look at the average age of your accounts and how old your oldest account is, so even if there's no repayment history, just the presence of an old account that's still open can contribute favourably in some credit scoring models.

Absolutely, I've set up a direct debit for the full statement balance as part of the application process.

And absolutely, the fanciful scores that credit reference agencies sell consumers (CreditExpert especially, absolute rip off) aren't often representative of how a lender is likely to see a consumer, and we should certainly never pay to see this number. 

One way we could track our creditworthiness is by way of actual lenders soft searches - for example, seeing what bank accounts Nationwide offer, what rates Zopa / RateSetter / LiveLend / Lendable / et. al, offer, and such forth. These comapnies all provide soft searches and actual results based on their own credit scoring model, so could be a better way of tracking one's creditworthiness. 

As lenders, we're more interested in active use of credit, to see how it is being used. Age of account is not of as much importance as people tend to think, as long as there is an account or two which has been open for a decent while.

Unused accounts are certainly better than nothing, but using them responsibly puts you in the best light and also helps prevent them being closed.

Fighter1986

Deleted_User said:

As lenders, we're 

Oh, you actually work for a lender. Great to know. Thanks for the extra advice, I shall finesse my approach even more  

mwarby

Deleted_User said:

Fighter1986 said:

Deleted_User said:

Unused cards will have no impact on building a positive credit history. 

Any card that you get, make sure you use them and clear in full each month. If you can get at least a couple, all the better.

Ignore any changes in your credit score while you rebuild your history.

...You're almost right, but the date on which an account was opened can contribute towards creditworthiness. Lenders look at the average age of your accounts and how old your oldest account is, so even if there's no repayment history, just the presence of an old account that's still open can contribute favourably in some credit scoring models.

Absolutely, I've set up a direct debit for the full statement balance as part of the application process.

And absolutely, the fanciful scores that credit reference agencies sell consumers (CreditExpert especially, absolute rip off) aren't often representative of how a lender is likely to see a consumer, and we should certainly never pay to see this number. 

One way we could track our creditworthiness is by way of actual lenders soft searches - for example, seeing what bank accounts Nationwide offer, what rates Zopa / RateSetter / LiveLend / Lendable / et. al, offer, and such forth. These comapnies all provide soft searches and actual results based on their own credit scoring model, so could be a better way of tracking one's creditworthiness. 

As lenders, we're more interested in active use of credit, to see how it is being used. Age of account is not of as much importance as people tend to think, as long as there is an account or two which has been open for a decent while.

Unused accounts are certainly better than nothing, but using them responsibly puts you in the best light and also helps prevent them being closed.

Would you agree that for most lenders the insolvency data trumps all positive credit use data ?

Fighter1986

mwarby said:

Would you agree that for most lenders the insolvency data trumps all positive credit use data ?

There's no hard and fast rule, but generally speaking the effect is cumulative.
Yes, a discharged bankruptcy order is a severely derogitary entry on anyone's credit file, but it certainly doesn't mean they would never pass any credit checks for the next six years, nor would it mean any positive data obtained since is irrelevant due to the presence of insolvency data.

E.g.

Borrower A was discharged from Bankruptcy on 03/2017, and since then has had one contract mobile phone, one credit card, and one bank account all open for three years. He has paid off his credit card in full each month and his balance never went above 50% of his limit. He's always paid his mobile phone on time, and has never been overdrawn. He hasn't applied for credit even once in the last year. 

Borrower B was never bankrupt and never got a CCJ but has an outstanding default which they never paid off which they've had for three years now, and since then has had a basic bank account, a pay as you go phone, and no credit card. 

Who would you be more inclined to lend money to?

Fighter1986

Update:

Aqua changed their mind and emailed me to say "Actually, nah"
Tesco changed their mind and also emailed me to say "Actually, nah".

*Shrug* I guess I'll keep my little teal Tandem card with it's £150 limit and use it for one tank of fuel a month, see where we stand a year from now.

mwarby

Fighter1986 said:

mwarby said:

Would you agree that for most lenders the insolvency data trumps all positive credit use data ?

There's no hard and fast rule, but generally speaking the effect is cumulative.
Yes, a discharged bankruptcy order is a severely derogitary entry on anyone's credit file, but it certainly doesn't mean they would never pass any credit checks for the next six years, nor would it mean any positive data obtained since is irrelevant due to the presence of insolvency data.

E.g.

Borrower A was discharged from Bankruptcy on 03/2017, and since then has had one contract mobile phone, one credit card, and one bank account all open for three years. He has paid off his credit card in full each month and his balance never went above 50% of his limit. He's always paid his mobile phone on time, and has never been overdrawn. He hasn't applied for credit even once in the last year. 

Borrower B was never bankrupt and never got a CCJ but has an outstanding default which they never paid off which they've had for three years now, and since then has had a basic bank account, a pay as you go phone, and no credit card. 

Who would you be more inclined to lend money to?

In my personal experience it did seem like the vast majority of lenders (other than those aiming at those with poor credit history) saw the insolvency and would decline on that no matter what. At the 6 year point eligibility checkers went from mostly 0% to 50-80% once the last default dropped off most are 80% plus

mwarby

Fighter1986 said:

Update:

Aqua changed their mind and emailed me to say "Actually, nah"
Tesco changed their mind and also emailed me to say "Actually, nah".

*Shrug* I guess I'll keep my little teal Tandem card with it's £150 limit and use it for one tank of fuel a month, see where we stand a year from now.

Aqua have always been a bit picky for me, they are also quite quick to drop limits unless you sustain usage. I’d guess that most providers will want to see a good few months of positive use history in new card before they issue you one. Three cards early on after discharge could look like your desperate for credit