Dealing with a bad credit rating and building a good one

paraguay99

I have had a credit card for the past 2 years which has been maxed out for the majority of that time and I have missed some payments. I am planning on getting it paid off ASAP. The credit limit is 600 euro but I routinely went over that and some months I didn't pay the minimum amount due. I am a student with AIB and am looking to get a graduate medicine loan of 50-100k in August. This is a loan that is given to all students who make it onto the course specifically into the royal college of surgeons. I am worried about my credit rating though.

my current plan is to pay off the credit card and then close my AIB account as I have also deposited some money into gambling websites online, which would probably work against me in getting the loan. So, pay off the outstanding 600 on the credit card and close my account and credit card account with AIB. Then open a new account with a different AIB branch a few weeks later and keep my credit clear until late August when I will be applying for the loan.

Is this a good strategy? I am assuming that I have bad credit because of my several missed payments over the past 2 years.

amdublin

Yes you will be looked at very differently from all other medicine students.

Why do you need this loan? Is it to pay your fees? Or something else?

Ps. Why open a new account? They will still see it/link it with your new one. You are probably on the icb if you go to another bank.

paraguay99

Yes the money is for fees. 50k for fees. They also give another 50k for living expenses over the 4 years but its probably unlikely that I will get that even if i somehow manage to get the 50k for fees. Surely having a good credit rating for 7-8 months beforehand will work in my favour somewhat? My rational behind closing the account and opening a new one was that I would open an account with the particular branch that deals with the medicine loan and have a clean slate with them. Although you are right that they could probably still link it with my closed account.

Are you saying I am unlikely to get the loan?

amdublin

Well considering it is for your fees you may be okay.

I'd suggest you build a clean record for the next few months and then discuss with your branch manager/loan officer.

coylemj

Not every medical student who starts in the RCSI is going to end up a doctor on a nice little salary and since you didn't seem to be able to manage a credit card with a limit of only 600 euros, I can't see how in this climate that you will be approved for the student fees and living expenses loan.

If I was you by the way I would not move my a/c from one AIB branch to another, it will not erase any black marks that might be on your file in the Irish Credit Bureau (ICB) and might just arouse suspicions in AIB. You will be leaving behind any remnant of goodwill that the people in your existing branch might have towards you.

The notion of moving from one branch of AIB to another and starting with a 'clean sheet' in the new branch is laughable, haven't you heard of computers and databases? AIB will have even more details of your credit history than the ICB and that reputation and history will follow you to any branch of AIB.

If you want to do something to improve your credit record, I'd suggest that you take out a small loan from AIB and then pay it back, maybe over 6 months up to August. That is the only thing that you the customer can do to actually improve your credit record.

paraguay99

coylemj wrote: »

Not every medical student who starts in the RCSI is going to end up a doctor on a nice little salary and since you didn't seem to be able to manage a credit card with a limit of only 600 euros, I can't see how in this climate that you will be approved for the student fees and living expenses loan.

If I was you by the way I would not move my a/c from one AIB branch to another, it will not erase any black marks that might be on your file in the Irish Credit Bureau (ICB) and might just arouse suspicions in AIB. You will be leaving behind any remnant of goodwill that the people in your existing branch might have towards you.

The notion of moving from one branch of AIB to another and starting with a 'clean sheet' in the new branch is laughable, haven't you heard of computers and databases? AIB will have even more details of your credit history than the ICB and that reputation and history will follow you to any branch of AIB.

If you want to do something to improve your credit record, I'd suggest that you take out a small loan from AIB and then pay it back, maybe over 6 months up to August. That is the only thing that you the customer can do to actually improve your credit record.

I appreciate your honest advice.

One question about improving my credit though. I'm planning on paying off the credit card ASAP. If I do that and get it down to zero, would it be a good idea to make a few purchases and pay them off quickly to build up my credit? I ask because I doubt AIB would grant me a loan.

paraguay99

amdublin wrote: »

Well considering it is for your fees you may be okay.

I'd suggest you build a clean record for the next few months and then discuss with your branch manager/loan officer.

Thanks for the advice. Another plus in my favour is that the 50k loan is paid in 4 installments directly to the college every year. However, I'll do all I can to pay off my remaining debt and keep a good record until the time comes. I appreciate your advice.

PCPhoto

building up a credit rating takes time ...not just a quick... make purchases and pay bills.... it can take months/years to create a good credit rating - the black mark of bad credit will stay for a while.

Be sure you are up front and honest with the bank - don't try to hide it.