Poor credit rating after early retirement

coppo233 · 31 March 2019 at 6:29PM

I retired early about 18 months ago and we are living mostly on investments - quite comfortably (thank you - after some years following Martins guidance and ideas!!!).
I was turned down for a 0% loan for the first time in my life a few weeks ago which came as a shock as well as feeling like an insult to us in the shop concerned..

I had just cancelled a a paid off 0% CC with my long term bank at the time. After the shop experience I thought that we better not get rid of the bank card so rang the bank, I was too late to stop the card cancellation - literally the day after the first call. The bank said - sarcastically I presume - 'no problem sir you are a valued long term customer- we'll give you a new one. Oh Sorry - you have been rejected.' We had gone from being trusted with a card with a 12K limit to being a credit risk overnight.

When I started checking with experian it seems that because we have no visible means of support Experian class us a high risk for new credit -although our general credit rating is high and we have never defaulted on anything - ever. My real pension does not start for another 3 years so it seems that we would be foolish to dump a bank for poor service because we would then not be able to get a new bank account or credit card.

Experian seem to have no info about investments other than our main home. Does anyone know of a way around this or do we have to spend the next three years apparently as a high credit risk customer? (And even then it is possible we will spend more than the pension income so they will still use the same flawed logic.)

AnotherJoe · 31 March 2019 at 7:28PM

To at least partially get round this problem I pay myself a regular amount each month that can be seen in my bank statements, and I state that that amount is my income on any forms where I need to state income such as for a car lease I have

coyrls · 31 March 2019 at 8:01PM

AnotherJoe wrote: »

To at least partially get round this problem I pay myself a regular amount each month that can be seen in my bank statements, and I state that that amount is my income on any forms where I need to state income such as for a car lease I have

Yes, I do the same. Forms and processes really aren't set up for living off drawdown or investments. I had real problems being a guarantor for my son’s flat when he was at university, as, even after supplying my bank statements, they claimed I had “no income”. I the end I pointed to the regular monthly transfer, which they accepted. Not sure that any of this affects credit ratings though; my credit rating has remained constant, despite having no employment or conventional pension income for four years.

Thrugelmir · 31 March 2019 at 8:55PM

coppo233 wrote: »

When I started checking with experian it seems that because we have no visible means of support Experian class us a high risk for new credit

Experian do not provide credit they collect and analyse data.

As you are no longer "employed" or have a low guaranteed level of income you may not meet the lenders criteria for the product you applied for.

AnotherJoe · 31 March 2019 at 9:26PM

Thrugelmir wrote: »

Experian do not provide credit they collect and analyse data.

As you are no longer "employed" or have a low guaranteed level of income you may not meet the lenders criteria for the product you applied for.

What i state on any forms is that my income is the amount i am paying myself and if asked to categorize it say its my pension.

Where there's still potentially an issue is tax, eg if I pay myself £40k a year and am asked what my income before tax is, if I say £40k they then assume what my post tax income will be, considerably less, maybe £27k. They cant cope with pre tax = post tax (since I currently pay no tax), and I dont know why they dont ask what my post tax income is either as isn't that more important ?)
Ironically my "guaranteed" income is more guaranteed than if i was an employee where i could be sacked next week whereas i am not going to sack myself.

Thrugelmir · 31 March 2019 at 9:36PM

AnotherJoe wrote: »

Ironically my "guaranteed" income is more guaranteed than if i was an employee where i could be sacked next week whereas i am not going to sack myself.

Finance houses will operate at the macro not micro level. Your personal circumstances aren't relevant. As policy is written on a catch all basis. You could spend your savings if you wished for example. Far from being guaranteed.

ajbell · 31 March 2019 at 9:38PM

I would definitely sack me.

coppo233 · 31 March 2019 at 11:25PM

Thanks for the replies. A couple of you mentioned 'paying yourself'. I am wondering how you make that 'stick' with any financial business you have to deal with?

I tried something that I thought similar to this which didn't work.....
I applied online for a card that I would normally expect to easily get just as a test. I stated my 'income' was about 2/3rds of my final salary (which in truth is what we are living on). The term 'income' was technically not correct though because the actual money is being trickled out of whatever is earning the lowest interest when we need it.. I was also rejected for that card though I don't know why exactly..This sounds to be similar to what the folk above are doing - only I got it wrong somehow.

The bank did ask me my income before rejecting the replacement credit card. I told them truthfully the amount (pretty small) but did say we had investments. That didn't help. There are monthly amounts paid into that account (and then moved) that could look in isolation like income. Perhaps being too truthful to the bank was my mistake there.

The next test will be trying to apply for new regular savers when the current batch run out. I wonder if I'll get rejected for new savings accounts - or just credit deals.

coppo233 · 31 March 2019 at 11:26PM

I'd definitely pay myself - generously. Not sure whether I could work with me though!

Sea_Shell · 1 April 2019 at 6:59AM

Like others have said, the whole industry isn't geared up to cope with those of us that live off savings, before drawing a "pension" from a known provider. It's a shame their "affordability" checks don't let you enter your available funds!!!. Much more secure than a wage i'd say. Athough, to be fair, we only want credit for stoozing anyway!!

System · 1 April 2019 at 8:48AM

Sea_Shell wrote: »

It's a shame their "affordability" checks don't let you enter your available funds

"High capital gives you freedom - high income makes you a slave"

Robin Day

Poor credit rating after early retirement

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