The Trouble With Banking When in Debt
Nearly all of us borrow money from time to time, whether that's in the form of an
overdraft, paying for petrol on credit card or taking out a mortgage. However, if
you're having problems with those debts could have some serious knock-on effects.
If you've had serious debt problems in the past - for example, if you've been bankrupt,
or entered a debt management plan - you may have problems applying for some bank
accounts.
This is because having debt problems can have a negative effect on your credit rating
- and records will show up on your credit file for up to six years.
However, there are things that can help if you're in debt and looking to improve
your finances in the long run. Here we'll look at what steps you could take.
Look for a suitable account
If you're turned away from opening a standard bank account due to your poor credit
rating, don't be put off - there are other options that could be open to you.
Many basic bank accounts can be opened without the need for a credit check - so
even if you've had debt problems in the past, or are currently on a debt management
plan or in an insolvency solution such as an IVA (Individual Voluntary Arrangement),
you could still successfully apply, as long as you are (in most cases) at least
18 years of age and living in the UK.
Even if you're trying to get back on your feet after really serious debt problems,
such as bankruptcy, you could still find
an appropriate bank account for this situation.
Consider talking to your account provider or use comparison websites to compare
what different accounts have to offer.
Consider improving your credit rating
If a poor credit rating is holding you back from getting the most out of the way
you bank, why not take steps to improve it?
If you've applied for a lot of credit recently, consider stopping your applications
for six months: banks will often become suspicious if they see too many recent credit
applications on your credit file. Of course, this is only really suitable for people
who aren't involved in a debt solution - or haven't been in the last six years.
Also, making sure you're registered on the Electoral Roll, and living at the same
address for a significant length of time, are just some of the things that could
help to repair your credit rating over time.