A Protected Trust Deed remains on your credit file for six years from its start date, alongside previous default notices, and before you’re discharged you won’t be able to obtain credit.
When the Protected Trust Deed term is complete, you’ll find that lenders are reluctant to lend money to you until you build up a better credit score, and demonstrate that you can handle your finances again.
Inform the Credit Reference Agencies
Once you’ve been discharged from the Trust Deed, you should let the credit reference agencies know as soon as possible.
Your trustee will issue a Discharge Certificate which should be copied and sent to the three main agencies so they can log it on your file.
Check that the information held about you is correct
Credit reference agencies are used by lenders as part of their due diligence procedures, and the information held about you will be a major factor in their willingness to lend.
This is why it is advantageous to check at regular intervals that the information on your credit file is correct once the Trust Deed has ended.
If creditors have failed to inform the agencies that you’ve repaid certain debts, this will continue to harm your credit rating.
So if you find an error, you should contact the creditor concerned and request that they inform the credit reference agency. The debt should then be marked as ‘satisfied’ on your credit file.
Use credit to your advantage
Credit can be used to boost your credit score once the Trust Deed term is complete. If you don’t have any lines of credit in the long-term, it can have a detrimental effect on your credit rating.
Lenders like to see that you’re responsible with money, and a great way to illustrate that you a responsible borrower is by using ‘credit builder’ credit cards.
A number of specialist lenders offer these credit cards for people who are trying to rebuild their credit file following a period of debt. As long as you meet all the required repayments in full and on time, your credit rating will be boosted over time.
If you fail to make a single repayment, however, your credit file will be further damaged and you’ll find it significantly more difficult to borrow in the future. Additionally, it’s better to use this type of card for small purchases which can be repaid easily in full, rather than large items, as the interest rates are extremely high if you default.
Lenders typically look at the recent credit activity when they check a credit file, and over a period of time time, repaying the balance on your card each month will work in your favour, as it shows that you can be trusted again as a borrower.
Additionally, your lender may be inclined to reduce the rate of interest attached to your card, if you repay in full over the long-term.
Make sure you’re on the electoral register
Being on the register to vote in Scotland confirms to lenders that you have a permanent address, which will generally boost your chances of being offered credit when you look to rebuild your credit score.