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Rebuilding Credit after Debt

Debt and your Credit Score
Image courtesy of Stuart Miles /

In this post I discuss rebuilding your credit rating after being in debt. This is something I am currently doing and also did in the past the last time I got out of debt.

Credit might be important to you because you may be thinking about getting a mortgage after paying off your debts or you may just want your credit rating to be back to a good level. Either way in this post I explain the steps I have gone through to start rebuilding my credit.

Current Credit Status

The first thing I did was to check my credit report to see just how bad things are, and let me tell you things are pretty grim. I have a very poor credit score, the kind of score that sets off alarm bells whenever I apply for credit. This means my choice of credit is very limited which is a good thing in some ways.

I have a large number of defaults and late payment markers on my credit file, these types of information on your credit file make getting credit very difficult indeed but not impossible. You just need to apply for the right products or what is known in the business as Sub Prime credit.

When checking your credit report it is also a good idea to make sure that what is being reported is actually correct. I had one such account with Virgin Mobile that wasn’t correct and not only was the information removed, the debt was written off too. You can read more about my Virgin Mobile Complaint on this blog if you would like to find out more.

First steps to rebuilding your Credit

About a year ago I applied for a Vanquis Card but was rejected. That’s fine I thought as I was testing the water to see what was what. At the same time I applied for a sim only contract with Three mobile and was accepted (only just). The Three contract one was a surprise as I have a default with them. I have been paying this contract on time ever since which will help my credit rating improve.

I did of course also have my car finance account with Moneybarn which I paid on time for several years. I eventually settled this and after a lot of messing about bought another car on credit. You can read about my car finance madness on this blog by the way.

Around four months ago I applied for a Vanquis card again and was accepted this time with a limit of £150. I am pleased to say that I use this card in the proper way. Typically I buy petrol with it then pay it off in full at the end of the month. This will start to rebuild my credit longer term as I establish a good repayment history. I would recommend you try this if you are disciplined enough and won’t be tempted to just spend on the card and end up in debt.

There is also my new car finance which I will be paying on time each month. This will also go towards improving my overall credit score.

The Bad News

Whilst having some existing sensibly managed credit accounts on your report will help you, it only really starts to help once all of the bad data drops off your report. For example if you have defaults and late payment markers, these will need to drop off your report completely and that can take up to six years. However like I say having some existing well managed accounts lays the foundations for improving your credit score when this bad data has gone.

You should find that you can be accepted for more credit in the future, as I found out last time I was in this situation. However please don’t make the same mistakes I did and get into debt again! Otherwise you will end up writing a blog about it. :-)


There are several things I would say about this. Only take on a new credit account if you think you are ready for it and will manage it properly. If you don’t think you can do this then stay away as you don’t want to make things worse.

The second thing is that it will take time for your credit to get better. Having a couple of accounts now will lay the foundations for when the negative data you have is no longer reported on your credit report in the future.

The third and final thing is learn from your past mistakes and take a completely different outlook on credit. Please don’t do what I did and get into debt again, because let me tell you the second time round is much worse.

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