Cannot get approved for any credit at all despite good score and no ccjs etc, frustrating

[Iamsocold888]

I had a debt repayment plan almost a year ago as I had around £7000 debts, but I received a family inheritance and paid the vast majority of it off, so was only using the plan for around 2 months.
I have around £130 of loan debt but nothing else, no overdraft, no cards etc and I use a credit boosting app

I’m on the electoral register

Haven’t had any missed payments for quite a few months

However I cannot even get approved for klarna due to my credit history. I’m not trying to take out a card or a loan otherwise, I just want to split the cost of something on klarna.

Out of interest i searched my loan eligibility and I wasn’t eligible for anything. It’s frustrating as my credit score is ‘good’ on Experian now, used to be very poor a year ago.

I am on track and save money each month, next to no debt. I’m not sure why I am rejected for everything as it’s been 6 months since the debt management plan finished too, is it going to take years until I can access anything ?

To really stay out of debt long term, you need a complete shift in your approach to credit. things like Klarma should never be used. Just ignore that they exist. Those companies are trying to take advantage of people.

Credit is for extremely large purchases like a house or a car. It can also be used in emergencies. If you can be responsible, credit is also handy for simply paying for your purchases on one account separated from your bank account for security, and then making one payment each month. For that regular spending though, you should never be putting anything on the credit card if the money is not already sitting in the bank account to pay for it.

@Magicalwoodlands

With Klarna, for those who don’t realise, it isn’t just a form of credit but a form of managing buying online.

For example, if you want to buy a dress and you aren’t sure whether a 12 or 14 would be a better fit, you buy both and with Klarna can return the one that doesn’t fit as well without money leaving your account and being returned which can be a faff.

If we all lived within our means very few people would buy a house, by the way.

Which is fine if you're using it for the reason of buying and returning multiple items.

If you're using it to spread out payments for things you can't really afford, you shouldn't use it.

Almost everyone here has said that credit should only be used for big purchases like houses and, if necessary, cars.

Just checked my file and 0 defaults but 3 missed payments before March 2021, so it’ll be that. No hard searches etc, hopefully in a few months things will improve

Have you tried speaking to your own bank? Not the same circumstances, but I was rejected for something fairly trivial because I didn't have enough credit history. My bank were able to give me a credit card with a fairly low limit which I then used to build my credit score.

I always thought it was 6yrs that things stayed on a credit file, but my ex had a lot of debt I helped him shift.
He'd got consolidated loans etc and payment plans set up. Low income and a shit credit score. Couldn't get credit cards etc.
Within a year of us splitting up he had a mortgage. So I assume it's easier to fix a credit score than I was led to believe.

It doesn’t tend to take ages but it does take a few months.

Being unable to access credit of any kind is obviously a problem, so it’s hardly unreasonable to look at sorting that.

Sorry, haven't read all the other replies.

I had an IVA a few years ago (finished in 2017). My credit record was wiped 12 months after that ended. After that I took out a credit card with a low limit and used it & paid it off every month to acquire a new credit record. It didn't take very long to get back up to an excellent credit rating. Now have a more mainstream credit card with a higher limit but still pay it off every month: I have no intention of going into debt again.

So, it might be the case that you have to wait either until the end of the scheduled period of the management plan or possibly until a year after to get back to being able to build up a credit record.

If you are sure you can manage to pay it off in full every month talk to your bank about a low limit credit card. Use it for say petrol, something you have to pay for, and build credit that way.

If you rent a property ask your landlord if they would accept payment through Credit Ladder, Google it. That will mean your rent will be counted just like a mortgage repayment would be.

After a few months your credit history will look better, more stable, with active debt management, the credit card, included.

I entered on to a debt management plan with StepChange in January 2019, with over £15k of debt, it wasn't legally binding but all my creditors agreed to it, but not before I was issued 3 defaults, one from each creditor. I stayed on the debt plan until June 2021 at which point I still had £10k+ debt but was very lucky in that my father paid it all off for me after seeing my mental health struggling. I made an agreement with each creditor of what they would accept and I think we ended up paying just over £7.5k to close my debts and end the DMP. I didn't want to partially settle as I know it's worse for your credit rating, but he was doing me a huge favour so I didn't argue.

My credit rating is absolutely rubbish, admittedly, but I was accepted in August for an Aqua credit building card which I use throughout the month then pay off in full every month too. My bank (Monzo) allowed me to open an overdraft of £500 a few months ago too, I have literally never used it but thought it may be good for my credit score to have low credit utilisation (I might be wrong about that though!) Clearscore keep saying I'm on track with things improving and I follow all advice it gives and my score is crawling up (though slowly)

The defaults won't disappear until the full 6 years is up, but the older they get the more kindly they'll be looked upon. Overall I haven't struggled to get credit since but do have very high interest ratings and wouldn't dream of not paying off in full monthly again. Sorry if I've gone too specific here - it just seemed similar and the agreement you describe sounds like a DMP, the same as I had, which I was on for far longer than you, so I thought it may be useful.

I have been in a LOT of debt but I managed to repay it all and completely shifted my whole approach to money.
I wouldn’t touch Klarna or Clearpay etc as they are a “Gateway drug” in terms of debt. My credit is very good now and I can easily get credi5 but I won’t as I know what a slippery slope it is.
If you have had past debt issues it’s a very bad idea to go into debt at all (apart from mortgage )

I don't think it's been that long. From their point of view you were in £7k of debt 12 months ago, and are still in debt - although a lesser amount - now.

You've just not given it long enough to prove you've changed your ways.

You've had some good advice regarding rebuilding credit etc. I just wanted to say that if Klarna is the only thing you've applied for, don't let a rejection get you down. I've used it a few times successfully but have also been rejected more than once. This is despite having an excellent credit history, I pay off my credit cards in full every month, have never missed a payment (on anything) in my entire life and I own a house. Just go for the credit builder type card and try and build your score up.

Klarna don't do do hrs searches unless you are applying for one of their longer term credit products. The buy now pay later never shows on a credit report. Klarna have no rhyme or reason to their lending either though. Sometimes they will let me put hundreds on my account and other times when I have had nothing outstanding they have rejected me so don't worry too much about not getting Klarna.

Don't do hard searches

I’m not sure why your being rejected my credit rating has a few issues on it and I get offered credit bloody everywhere. It’s dangerous.

Do you have a contract phone? Pay your energy bills by dd or pre pay?

I am actually in a debt repayment plan with step change and can still get clear pay and klarna ? Only for small amounts like £400 over 4-8 payments though?

I think it's very obvious your are a debt risk and it's unsurprising you can't get further loans. There's some really good advice on here - Particularly about your attitude to debt but up to you if you listen

@SnekkinOnDown

I am actually in a debt repayment plan with step change and can still get clear pay and klarna ? Only for small amounts like £400 over 4-8 payments though?

Be careful as taking out additional credit whilst on a DMP is a breach of your plan and StepChange can cancel it.

You need a minimum of a year before they will even consider you as a client. A few months isn't enough. Basically they want to see you balancing the books for a good while before it's ethical to lend again, they are doing you a favour - save up rather than klana

@PissedOffNeighbour22

I always thought it was 6yrs that things stayed on a credit file, but my ex had a lot of debt I helped him shift. He'd got consolidated loans etc and payment plans set up. Low income and a shit credit score. Couldn't get credit cards etc. Within a year of us splitting up he had a mortgage. So I assume it's easier to fix a credit score than I was led to believe.

It's easier to get a mortgage than unsecured credit (credit score speaking) as its secured on an asset therefore less risky. Usually people like this end up with a higher interest rate 4%-5% and have to put down a bigger deposit but its not impossible, where as they may still be declined for a credit card etc.

*I use a credit boosting app

I’m on the electoral register

Haven’t had any missed payments for quite a few months*

It is probably your missed payments that are affecting it even though they were last year. The credit boosting app is pointless.

How long have you been on electoral roll do you move about regularly, have you got some long standing well maintained bank accounts, how long you been you job.

The above are various different things credit providers look at.

I think sometimes having a debt and paying it off monthly over years builds your credit score. Not having debt doesn't.

Was your debt plan an Iva ?

@Valhalla17

"I can tell you from experience (my DRP very similar to yours) that it is 6 years from when you paid it off."

Not true. Its from the date of default, the 6yrs doesn't just start when you've paid it off.

I was in a similar boat OP. Could never get any credit once split with partner. A CCJ, 2 defaults. I had to take a mortgage break etc due to being vulnerable at the time etc. I've had several years now of no missed payments and am now able to get credit. I'm very mindful about what I use credit for and keep to a minimum, as I plan to remortgage next year. Key for you will be to not miss payments. A credit builder card may help but you can't afford to miss those payments either...so be 100% sure and committed before taking one out.

Not actually strictly true, the banks appear to follow their own rules I've been helping a friend: it seems to be (for Lloyds at least) 6 years from when the bank record your debt as paid off on your record. Not from the default, and not from the debt actually being paid off. You need to have paid off the debt, and any debt still showing as not paid you need to contact the bank / credit card provider and ask them to correct the record.

Iamsocold888 I couldn’t get a credit card with anyone, I decided to check my credit score on experian,and it came up that i was eligible for a CC. Try doing it via experian.