19 Aug How Long After Debt Review Can I Apply for Credit?
How long after debt review can you apply for credit? You can apply for debt review as soon as your dispute with the bureaus is approved, so after about 21 days, or you can rebuild your credit first. Rebuilding your credit first will reduce your risk of being declined for credit, and so reduce your risk of adding a hard enquiry to an already dismal credit record.
Too many hard enquiries in a short period of time reduces your credit score and makes it look like you’re desperate for credit, which indicates that you’re financially unstable to lenders– this may make them nervous about lending you credit.
Keep reading to find out how long after debt review you can apply for credit, the best way to get credit after debt review, and how you can rebuild your credit quickly.
Let’s get into it.
You Can Apply After 3 Weeks
Technically, you can apply for credit as soon as the debt review flag has been removed from your credit record. After you’ve submitted your dispute and credit clearance letters to the bureaux, they have 21 days to assess your dispute and provide a verdict. If your dispute is approved, the flag will have disappeared from your credit profile come the next billing cycle.
Applying straight after debt review is a risky move. Your credit score may not have gone up yet, even if the flag is gone. You’ll likely won’t be granted access to credit because of your low score. We recommend you rebuild your credit before applying again. That’s because submitting too many applications at once will further lower your credit score because of too many hard enquiries.
Or, You Could Apply After a Few Months
If you want to be sure your application is approved, we recommend you rebuild your credit score first. Yes, this may seem tedious, but once your credit score is average, or preferably above average, you’ll get better terms, like lower interest, longer repayment terms, and better credit insurance premiums.
How to Rebuild Your Credit
When the debt review flag is gone, you’ll be able to take out credit again because it won’t be reckless lending. It would be best if you applied for a secured credit card. This is a credit card where your deposit becomes your credit limit and is a downpayment in the case of your default. You should spend 30% of your credit limit every month, which is the optimal credit utilisation rate (the amount of credit you use compared to what’s available).
Pay back what you owe on time, and you’ll see your credit score climb. The bank may even offer you an unsecured credit card after some time. When your credit score is above 580, you’ll be allowed to take out loans.
Alternatively, you might consider taking out a store card. These are easy to access with low credit records. Beware that store cards often have higher interest rates, so a secured credit card may be the safer option, especially if you don’t earn all that much.
When you apply for credit after debt review is completely at your discretion. You could risk being disapproved, or be patient and rebuild your credit and get financially fit.
If you’re overindebted and feel like you have too many repayments to make or can’t meet your living costs, contact True North Debt. We’re experts in debt counselling and can help you live debt-free in 3 years or less. Debt help is here, make use of it.