Can’t improve credit rating post DRO

Cate1976

I’m in the position where it appears that I cannot improve my credit rating post DRO.  I was discharged early October last year.  Here’s the details which I think are relevant and will hopefully mean someone who’s been in a similar situation to me will be able to advise me on how I can improve my credit rating.  To avoid hard searches, I’ve only done a couple of eligibility checkers which are soft searches.  The most recent being today for the Tesco foundation credit card which said 0% chance of being accepted.  If I could get a credit card, I’d only be looking for maximum £250 to allow for unexpected expenses if any arise, I’d also use maybe £50 for food the week before we get money in.

Obviously my credit score is low due to the DRO (527/710).  Credit Karma is showing 4 derogatory marks on my report, I’m assuming the DRO is one.  Looking through the closed accounts section of my credit report, I’ve found 3 showing defaults, the earliest of which dates from 1st December 2017, the most recent is dated 30th June 2020.  I’m aware that these show for six years from default date.  Does the DRO show for six years from date it started or the discharge date?

The second thing which I think isn’t helping is that neither my husband or I are working, he’s classified disabled with me being his full time carer.  On income section, I’m putting the income being what UC is and my PIP (I have high functioning Autism).  I’m aware that many places won’t accept anyone who’s not working, there’s not many jobs I could do due to the impact that Autism has on my social/communication skills when I’m face to face.

The third thing which I think isn’t helping is that my husband and I moved house earlier this year, although we moved into where we are end of January, our council only put us on electoral roll beginning of April, Credit Karma has 28th February as date they have me registered at current address.  We were at previous address for 10 years 5 months.  If the recent house move is having an impact, how many months/years will it be before it doesn’t get held against me?  If places are holding recent house move against me, why can’t they take into account the length of time at previous address as proof that house move is genuine?  I could understand house move being held against me if we were moving every few months but to hold recent move against me is unfair given that recent house move was first in 10 years.

The things I’m considering doing, all of which I’m hesitant to do due to impact on already low credit score if any/all get refused:

1)  The Cashplus account and card which has the credit builder on it, I don’t think they’ll hold employment status against me which just leaves the recent move issue and possibly how low my credit score is.
2)  There’s a company in East Anglia called Hughes Direct which rents out things, I was in yesterday and spoke to a very helpful sales assistant who explained that they do rent to people on benefits, the item I’m considering renting from them is £24 month.  They look at affordability and have their own in house system for checking eligibility.  If this is down, they use Experian for which I can’t work out how to see just my score which they claim can be done without paying.
3)  Try to find a credit card company that will let me have a credit card, I’m aware that I’d only have a low limit, if they offered £100, I’d take it.  Credit Karma is suggesting that I have a 100% likelihood of being accepted for the Capital One Classic Platinum card.  This is with me putting £15,000 in for household income and maximum limit of £250.  I’m reluctant to try this or any other credit builder cards due to Tesco showing 0% chance of being accepted.
4)  I’m considering signing up to the rent exchange scheme which allows rent payments (standing order) to be reported to credit reference agencies.  There’s a free version which will report to one agency (thinking Experian as I think that’s the one most places use).  There’s also a £5 month version which reports to Experian, Equifax, Transunion and Crediva (haven’t heard of the fourth before).
5)  Try to get a sim only contract for mobile phone, I’m currently with Giff Gaff paying £10 on recurring payment from my debit card.  I don’t think this shows on my credit report though.  I’m hesitant to try this though due to how much credit score will go down if it gets refused.

None of the direct debits for household bills have bounced for the last several months, can’t remember the last time one did bounce.  I was accepted for paying for gas/electric by direct debit with Octopus without having to pay a deposit when they did a hard search on me end of January which I was both surprised and pleased about.

If everything Credit Karma suggests for improving credit score is blocked, how can I improve my credit score?  Am I in the situation that it’s not going to improve until the DRO drops off?

Thanks in advance to anyone who can give me any advice on how to improve my credit score and how long it’s likely to take.  From what I’ve been able to find out, if I can improve my score by a further 24 points, it’ll move from needs work into the needs some work, this is from the credit score section of my banking app.

MorningcoffeeIV

Lol. Your score is made up and not seen or used by anyone.  It's not connected to your credit worthiness, whichever CRA you use.

Lenders only look at the actual data on your files, so ignore the scores completely.  They have as much relevance as your horoscope.

Sonic101

Hi Cate1976

One thing that jumps out is that you were only put on the electoral role in April - it might be taking a while for systems to update. I wouldn’t worry about change of address, you have only moved once in the last decade. It might only be a problem if you had moved every couple of years.

With regards to things to do to improve, the free rent exchange thing might be worth doing but I wouldn’t sign up for anything that costs money, especially if you are on a tight budget 

In your position I would also be hesitant to try and get a credit card. If you were planing to use it to ‘sub’ yourself before the end of the money it could be a red flag; ideally you need to go over your budget/timings of payments to try and ensure you make it stretch. 

MalMonroe

Hi, first of all, your credit score is never seen by any lender. They all have their own scoring criteria. Lenders will look at your credit history which, while there's a DRO on it, will probably stay at 'needs work'.

The best credit reference agencies to use are Experian, Equifax and TransUnion - they will give you a better picture of your finances. And Credit Karma always gives me a lower score and more miserable news than any of the other CRAs. 

Secondly, I've been in a very similar situation - I had a DRO and was (and still am, of course) a pensioner - so on a low income. 

Once the first 12 months had passed, I applied for one of the 'credit builder' cards. It was an Ocean card from Capital One but there are others. I think the Capital One platinum one will be something to apply for later on since it's not a credit-builder. Tesco also turned me down post-DRO but once the DRO had dropped off my credit files completely, I was able to get one of their cards with a £1000 limit.

See link - https://www.moneysupermarket.com/credit-cards/credit-builder/

You don't need one with a high limit, as you have said -you just need one to use regularly that you pay off, in full, every month to prove to lenders that you are now responsible with money.

On your credit files it should state DRO somewhere. It stays on there for six years in total - so five more years as from last October in your case. It didn't stop me getting a credit builder card initially. I just applied for the Capital One Ocean card and was able to have one. With a low limit to start with, of course.

You just have to be very patient and take things at a slow pace because you're building yourself up and you don't want to end up in the same kind of financial difficulty again. That's what I kept thinking, 'never again'. But it does take time and it's best not to try to get too much credit too soon. After the DRO I was very cautious and I have been debt-free since it did end. I actually have four credit cards now, none of them credit builders and they are all paid off in full every month. In fact, two are frozen at the moment and I use them in rotation but may be closing a couple of them soon. 

It's not clear what you're wanting to spend £24 rent per month for - is it an essential item that you or your husband cannot live without? I now always multiply monthly costs by 12 to see how much that would cost a year. I mean, £24 doesn't sound like much but £288 does - to me. I started putting regular amounts into a savings account and that's now just reached £3k. (It's taken a while though). I had to be very firm and stop myself buying things I didn't need and instead of spending on non-essential items, putting an amount into my savings. It doesn't really matter what amount it is, even if it's just £10 a month. 

I'm also not sure how the rent exchange scheme will help. Especially if you have to pay a fiver for it. I'm a council tenant and I never had to do that. Nor would I want to, voluntarily.

Don't worry about trying to improve your score because nobody cares about it. 

From my own experience, the thing that helps is time. Time and writing things down, which I never did before getting into a financial mess. Now I am able to budget and it's all because I don't buy what I can't afford and don't need. 

You're on the right track but as I keep going on, it does take time. You will get there in the end, I did and I'm very proud of my achievement. You will be too. To my mind the first year was the worst - that's over now but it's up to you to keep yourself on the straight and narrow.

All the best for the future, you can do this! 

Sonic101

Sorry, forgot to add - it’s six years from the beginning date of your DRO to when it drops off your file.

Cate1976

Thanks for replies, the item I’m thinking about renting is a newer ipad as the one I have  now is 6 years old and only has 32gb so won’t do everything I need it to.  The idea being rent one that’s newer and 64GB using the monthly payments to improve credit score.  It’d be a 12 month contract which would give me time to save the money for a newer one.

Good to know that you were able to get a credit builder card post DRO, I’ll research credit builder ones, if somewhere would give me £100 limit, I might not use all of it and it’d be paid off fully each month.

If I do the rent scheme, more likely than not, I’d use the free version and report to Experian.

The DRO is showing on Credit Karma in the bankruptcy section of my report, good to know that it’s on there for six years from start date.

Brie

Rental companies always set off alarms bells with me.  I've picked out a TV renting on Hughes website for £24.  Minimum rental period is 12 so you'll be paying £288.  The same TV sells at Argos for £379 - so that's less than another 4 months worth of rental.  

What I couldn't find on their website is what happens if you stop paying.  And what happens if you have paid the value of the item.  So is it yours after 16 months when you have paid the equivalent charges at Argos? Or if you couldn't afford it to you hand it back and have nothing to show for your money.  And there's nothing like APR equivalent shown as, I suppose, you aren't actually buying anything.  

Maybe I've missed something but I would be very cautious about doing this to build your credit rating.  I'd suggest that a credit builder card is the better option - as long as you pay it off in full every month it doesn't cost you anything.  Places like Tesco will be happier about you in a few years when the DRO is more in the past, your electoral info is updated and you have a bit more solid creditworthiness under your belt. 

theoretica

What is the reason you care about your credit rating?

Cate1976

The reason I care about my credit rating is that I believe that the situation I’m in means I can’t get credit from anyone which means I can’t show that I can now manage a small amount of credit.  I’ve asked on here as I know people will be able to advise me on what types of credit are likely to be approved.  From the replies so far, it appears that a credit builder card might be the best option.  

Does Cashplus still have the advance thing that allows you to borrow a small amount of money which then gets paid back?  I’m not talking about the credit builder thing they do which means the £5.95 a month fee gets reports to CRA’s.

Current situation isn’t helped by Scottish Power owing us money for the amount we were in credit on the electric when we moved (technical errors appeared on our account in 2020 which meant we couldn’t have duel fuel).   4th April, they said 14 working days, I budgeted for that allowing for bank holidays over Easter.  Cheque didn’t come, so 27th April got on the webchat thing, helpful person said that system won’t allow refund to be issued.  Not getting the refund when I budgeted for it has messed up our finances.  Budget for month from next payment of UC will be done on that alone.

Sonic101

Cate1976 said:

The reason I care about my credit rating is that I believe that the situation I’m in means I can’t get credit from anyone which means I can’t show that I can now manage a small amount of credit.  I’ve asked on here as I know people will be able to advise me on what types of credit are likely to be approved.  From the replies so far, it appears that a credit builder card might be the best option.  

Does Cashplus still have the advance thing that allows you to borrow a small amount of money which then gets paid back?  I’m not talking about the credit builder thing they do which means the £5.95 a month fee gets reports to CRA’s.

Current situation isn’t helped by Scottish Power owing us money for the amount we were in credit on the electric when we moved (technical errors appeared on our account in 2020 which meant we couldn’t have duel fuel).   4th April, they said 14 working days, I budgeted for that allowing for bank holidays over Easter.  Cheque didn’t come, so 27th April got on the webchat thing, helpful person said that system won’t allow refund to be issued.  Not getting the refund when I budgeted for it has messed up our finances.  Budget for month from next payment of UC will be done on that alone.

Hi again
You have already received responses as to what might be the best way to help build your credit.
As several people have suggested, any option that costs money should probably be avoided, so yes applying for a credit builder card might be the best option. WRT cash plus, you might be best asking them the question. 

I understand the frustration with Scottish Power, keep pushing them on that and if necessary take to Twitter - that sometimes does the trick.

However - and I mean this in the nicest possible way - ideally you need to forecast your budget on income you know for definite you’ve got coming in, rather than what ‘should’ or might be coming in (I’ve been caught out like that before). Also check to see if there’s anyway of increasing your income - such as any further benefits, or discounts ,  you may be entitled to. 

sourcrates

In my own experience, I had both IVA and DRO within 12 years, my own bad financial planning, stupid spending, and sheer bad luck.

When my DRO ended, I took the decision to stop playing the borrowing game, to stop being a slave to a corrupt financial system, who lend you money they don`t have, then sell your debts for peanuts, but still expect to get the full face value back from you.

So I don`t use credit cards, have no need for loans, I bought my classic car for cash I saved up, I live within my means, I don`t chase after my fictitious credit score, I work part time, don`t spend money on stuff I don`t need, and have no need to rely on any bank, lender or loan shark, for anything, once my wages are gone, there gone, and I manage quite well.

I can honestly say I feel so much better for it, after 40 odd years living off one form of credit or another, it`s quite a liberating feeling, and I heartily recommend it to anyone.