Help required with large Persistent Credit Card Debt. Have had a recent first Default.

ManyWays

 Is there a certain number of Defaults I should avoid on my credit file? I read someone that 3 or more than 3 is really bad for your credit file. Or does the number of defaults not matter?
There is no particular number to avoid, nothing like "2 is ok but 3 is bad". Basically, you should stop worrying about your credit record in the short term, as you cant afford to borrow more and no one will lend to you except at a dreadful rate. 

I have also read that its really difficult to change your bank when on UC.
I don't know where you are reading this, but it doesnt seem reliable. You will find it very hard to get an account with an overdraft when you have started missing payments, but you should be able to get an account without an overdraft, perhaps a basic bank account. Monzo is a nice app. If you want a local branch, Nationwide may be good. 

RAS

With defaults or a lot of debt, getting a new standard bank account is difficult, except some on-line offers. 

Most banks offer basic bank accounts with debit cards and standing orders, on-line shopping etc. They require ID and address confirmation, no credit check.

Just make sure it's not part of a banking group to whom you owe nothing.

theville32

ManyWays said:

 Is there a certain number of Defaults I should avoid on my credit file? I read someone that 3 or more than 3 is really bad for your credit file. Or does the number of defaults not matter?
There is no particular number to avoid, nothing like "2 is ok but 3 is bad". Basically, you should stop worrying about your credit record in the short term, as you cant afford to borrow more and no one will lend to you except at a dreadful rate. 

I have also read that its really difficult to change your bank when on UC.
I don't know where you are reading this, but it doesnt seem reliable. You will find it very hard to get an account with an overdraft when you have started missing payments, but you should be able to get an account without an overdraft, perhaps a basic bank account. Monzo is a nice app. If you want a local branch, Nationwide may be good. 

Thanks Manyways! That is good to know about there not been a number to avoid. I wasn't looking at borrowing more money, just the future i guess. However, as you say I shouldn't worry about my credit rating right now.

With regards to difficulty with switching banks when on UC, I read this on MSE actually and Martin wrote to the pension secretary about it a few weeks ago. 

https://www.moneysavingexpert.com/news/2025/12/universal-credit-bank-switching-letter/

theville32

RAS said:

With defaults or a lot of debt, getting a new standard bank account is difficult, except some on-line offers. 

Most banks offer basic bank accounts with debit cards and standing orders, on-line shopping etc. They require ID and address confirmation, no credit check.

Just make sure it's not part of a banking group to whom you owe nothing.

Hi RAS, thanks for your reply. Thats good to know about the banks offering basic accounts without doing a credit check.

I currently have a payment plan with a Nationwide Credit Card. I assume I should look elsewhere for a bank account? Cheers

zedonk

The main thing to be aware of when switching banks with UC is that when you give DWP your new bank details, they might require you to come into the Jobcentre with some proof of the new account. Any UC payments that you're due might be delayed until you've done this. It's not a huge deal if you're prepared for it and you time things well, i.e. tell them about the new account just after they've paid you, so there's time to complete the checks. 

RAS

Switching is not the same as setting up an account for a DMP. 

For a DMP it is essential that you do not use the switching mechanism. That will transfer all your DDs to your creditors, and even if you cancel them in the new account, they will re-instate them.

It does mean that people on UC may not be able to access switching bonus or other offers.

JibberdyDacodo

theville32 said:

07. Type of account - Barclaycard Bounce-back Loan
Date commenced - 2020 ?
Approx balance - £6410.00
Date last paid - November 2025
Interest charged: ?
Are you on arrangement or not paying - Currently paying monthly payment approx £132.00 p/mth
Note: I have used up all the payment options provided with Bounce back loans.

Was that taken by you personally (as in you are a sole trader) or through a Ltd company?

theville32

JibberdyDacodo said:

theville32 said:

07. Type of account - Barclaycard Bounce-back Loan
Date commenced - 2020 ?
Approx balance - £6410.00
Date last paid - November 2025
Interest charged: ?
Are you on arrangement or not paying - Currently paying monthly payment approx £132.00 p/mth
Note: I have used up all the payment options provided with Bounce back loans.

Was that taken by you personally (as in you are a sole trader) or through a Ltd company?

Thanks for the reply. I am a Sole Trader unfortunately.

theville32

Thanks for everyones comments. Just to clarify, with the information that you currently have would everyone be recommending getting another personal bank account setup asap? The only issue with this is I currently live in my Overdraft of £1250 - which I will not get on a new account.

- If so, any perfernces between a bricks and mortar bank and a digital bank like First Direct?

- I understand that I shoud not use the switching system. I should setup all DD's manually and it sounds like I should avoid setting up any Credit Card DD's. Those that I chose to cease paying anyway. 

- Any idea what to do with the Business Credit Card and Business Bounce Back Loan?

Just so you know, I am working on the SOA today and will hopefully have this ready tonight/tomorrow.

Thanks!

Gandalf644

theville32 said:

Thanks for everyones comments. Just to clarify, with the information that you currently have would everyone be recommending getting another personal bank account setup asap? The only issue with this is I currently live in my Overdraft of £1250 - which I will not get on a new account.

- If so, any perfernces between a bricks and mortar bank and a digital bank like First Direct?

- I understand that I shoud not use the switching system. I should setup all DD's manually and it sounds like I should avoid setting up any Credit Card DD's. Those that I chose to cease paying anyway. 

Any bank that you have no creditors with is fine. 

Either digital or traditional - depends on what suits you best. 

You do not want or need an overdraft - if you can only open a basic current account you will not get an overdraft anyway. 

Remember overdrafts have one of the higest interest rates, circa 40% so avoid one like the plague. 

Your current overdraft needs to be treated like other debts.