The most exciting thing about finishing your Trust Deed is the thought of all the things you’ll be able to do now the burden of debt has been lifted. You’ll be raring to get your life back on track, but there’s one more obstacle standing in your way – your credit rating. Once you had a credit card with a limit of thousands and could get anything you wanted. Now because of the Trust Deed a credit check will reveal your history and you’ll be hard-pressed to find anyone willing to give you credit. Even getting a new mobile phone contract could be a problem. It’s incredibly frustrating.
Take heart. The hardest part of having a Trust Deed is over. Rebuilding your credit - while irritating - will be relatively straight-forward and here are a few tips to help you get started.
Check your credit file
If the credit agencies have listed any incorrect entries or associations with your finances you might find it prevents you from building up your credit rating properly. For example, if you’re divorced you may still be linked to an ex-partner’s finances or you may mistakenly be associated with someone you house-shared with in the past. If you do find an incorrect entry, you need to contact the relevant credit agency - Experian, Equifax or Callcredit – and send them a letter of dissociation.
The credit agencies should see a copy of your Discharge Certificate
It will take a few months for your Insolvency Practitioner to tie up all the loose ends to do with your Trust Deed, but once everything is complete you will be issued with a Discharge Certificate. Make a few photocopies and send them in to the credit reference agencies so the completion of your Trust Deed can be logged on your credit file.
Get on to the electoral register
Being on the electoral register is official confirmation of your address and will help give lenders a little more confidence to lend to you after your Trust Deed. If you have not already done so, ring up your local council and arrange to get onto the electoral register as soon as possible.
Pay everything on time
Move heaven and earth to make sure any regular payments you have to make – for example a mortgage or mobile phone contract - are paid on time. After spending three years making regular payments for your Trust Deed, you already have the skills to do this well, so stick with this good habit when the Trust Deed is finished.
Never miss a payment
Even if a payment ends up being late through no fault of your own, credit agencies will still hold you accountable and that mistake is logged on your file.
That is not a good thing to have listed after your Trust Deed. Develop a pessimistic attitude to financial transactions and live by the mantra “if it can happen, it will happen” to anticipate problems in advance.
Set up direct debits for credit or store card payments to go out well before the payment date. Be aware of cards that take payments every 28 or 29 days, which means the payment dates could change every month. If you have to move a direct debit to another current account, make sure you have enough money to cover it just in case your instructions are not carried out and it is still taken from your old account.
Get a credit card
Credit cards are only as good or bad as your attitude to using them. Used the right way, credit cards can actually help to build up your credit rating after your Trust Deed. Every time you make an on-time payment on a credit card, you add a good credit event to your file and you need to build up a bank of these. Use the card ONLY to pay for one weekly shop or a tank of petrol every month and pay it off in full when the bill comes in.
Don’t be tempted to use it to pay for everything – credit cards may have led you down the path to a Trust Deed and you don’t want them to lead you there again. Only that one monthly on-time payment counts towards your credit rating so a £10 transaction is just as good for credit building purposes as a £100 transaction.
Unfortunately, only those cards with high rates of 25-40% will be open to you because of your Trust Deed, but this doesn’t matter. You will not be carrying a balance like you used to so bite the bullet and get one specifically designed for people with poor credit histories. Don’t apply for the cards with the really good rates because you will be turned down on the basis of your credit rating.
The last resort…pre-paid credit cards
If your credit history is very poor, you may even find getting high APR credit cards is very difficult after your Trust Deed. If that’s that case, there’s a newcomer on the credit card scene that could help. Pre-paid credit cards allow you to put money onto your card in advance and, as long as you pay the card’s monthly fee on time, a record of your good payment will be sent to the credit agencies to go onto your file.
If you’re smart and careful when using the tips in this article, it won’t be long before your credit rating after a trust deed is on the way up, letting you move on from your #links# and enjoy all the benefits of a debt-free future. #links# are the way forward!