How to improve your credit score after a Scottish Trust Deed

Scottish Trust Deeds generally last for four years, so if you’ve successfully reached the end of yours, you’ll be starting to think about rebuilding your financial status.

How will a Trust Deed have affected your credit rating, and what can you do to improve the situation when your trust deed completes?

A Trust Deed remains on your credit file for six years from its start date, alongside previous default notices, and before you’re discharged you generally won’t be able to obtain credit. When the Trust Deed term is complete, you’ll find that lenders continue to be extremely reluctant to lend until you build up a better credit score and demonstrate that you can handle your finances.

Here are a few ideas to help you do just that, and secure a more promising financial future following the completion of a trust deed:

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.

Use credit to my 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 need to see that you’re responsible with money, and a good way to demonstrate this is using ‘credit builder’ credit cards.

What are credit builder credit cards?

A number of specialist providers offer these 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.

It’s advisable to use this type of card only for small purchases which can be repaid easily in full, rather than large items, as the interest rates are extremely high on these types of cards.

Lenders generally look at the recent credit activity when they check a credit file, so over time, repaying the balance on your card each month will work in your favour, as it shows that you can now be trusted 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 and demonstrate you are behaving responsibly with this new line of credit.

What are pre-paid credit cards?

Pre-paid credit cards may be an option to help you rebuild your credit rating if there are no other alternatives at the end of the Trust Deed. You don’t have to prove your income to the provider when you apply for one of these cards, and there are no credit checks, so you’re guaranteed to be accepted.

There is a monthly fee, however, and this can be ‘loaned’ to you on the card. As long as you repay this monthly fee on time each month, your credit rating is built up and you become eligible for more lending.

How Scotland Debt Solutions can help with Trust Deeds

If you are struggling to keep up with your debts and would like to understand more about your options, Scotland Debt Solutions can offer further detailed advice tailored to your own situation if you are considering a Trust Deed.

By taking out a trust deed with Scotland Debt Solutions, we can help stop the phone calls and letters from those you owe money to immediately. We will contact your creditors and let them you that all further communication must go through us.

We work purely on behalf of Scottish residents in debt, providing the help and advice needed during challenging times.