How to rebuild credit? Rejected by Vanquis but "pre-approved" by Capital 1

hannahbrel

Hello,

I am currently unemployed and in receipt of UC and PIP relating to Schizoaffective Disorder.  I have been sectioned and made homeless several times over the past five years but have been working hard to manage my mental health over the past year, complying with my prescribed medication and working part-time on a voluntary basis.  If possible, I would like to improve my poor credit rating.

Having researched the forum for suitable credit-builder ccs, I decided to soft-check for the Vanquis card and was rejected.  I then completed the MSE eligibility checker whose results indicated I was 0% likely to successfully apply for an extensive list of credit-builder cards, including Vanquis (as I had just discovered).  I am confused, therefore, that both Clearscore and Credit Karma indicate that I am "100% pre-approved" for a variety of cards underwritten by Capital One.  I don't understand how this can be the case when Vanquis, which seems to be widely regarded as the very lowliest of providers (the "loose-moraled tramp of the cc industry" as someone here put it) rejected me, and per the MSE eligibility check there was a 0% chance of my being approved for this absolutely bottom-tier card.

While I have no outstanding debt, am on the electoral roll, up to date with bills and hold no debt, my credit score is poor and the MSE eligibility checker results were extremely negative. The "100% pre-approved" Cap 1 offerings sound too good to be true and I wondered what others would recommend?  If I were to apply to Cap 1 and be rejected (taking a further hit to my precarious credit) what would be the best ways to rebuild credit - join a credit union? Loqbox or similar?

CliveOfIndia

Firstly, ignore your score, it's nothing more than a meaningless marketing gimmick.

Secondly, take anything that the CRAs tell you with a very large pinch of salt.  They often earn a kickback from the lender if you take out a card through their site.

You're best to do an eligibility check on the lender's own website, they tend to be a little more accurate than the generic third-party aggregators.

One application, with an associated hard search, will do no harm to your credit rating.  Other lenders can see that a search was performed, but they won't know the outcome.  It's when you make several application in a short space of time that it starts to become an issue.

Do you have any other credit products - a mobile phone contract, for instance?  This will go some way to building up a positive history.

I'd be wary of any product where you're effectively paying money purely to improve your history.  That's very counter-productive.

I guess the big question is why do you want to improve your rating?  If you're wanting to take out a mortgage, loan, or any other credit product in the future then yes it makes eminent sense.  But do you foresee the need for credit in the near future?

hannahbrel

Thanks for your response Clive, very helpful.

I don't have a mobile phone contract, have used PAYG for years.  Are these easier to obtain than CCs?

You make a good point re need of credit in the near future. I would like to return to paid employment and obtain a mortgage at some point, but these are long term goals.  Perhaps I should focus on my health and upskilling and forget about credit for the timebeing, but if there are any other methods, aside from a mobile phone contract or responsible use of a CC that you or anyone else could suggest, I would be very interested, as rebuilding credit where possible seems like a responsible thing to do.

CliveOfIndia

A mobile phone contract is usually slightly easier to get than a credit card - however, don't go shelling out money unnecessarily just for the sake of it.

From what I can understand of your posts, it may very well be better to focus on your health in the immediate term and not worry too much about credit.  In any case, you may find it easier to get a CC when you're back in full-time employment.  Whilst UC and PIP are perfectly legitimate forms of income to state on an application, many lenders will look on a salary slightly more favourably.

Obviously it all comes down to numbers at the end of the day - your income versus your debts (if any) and your living expenses.  A lender won't discriminate against you if your only income is benefits, but if the numbers don't stack up then this could be the problem.