There are no rules against getting credit while in a trust deed but, because of your credit score when you're in one, the rates offered tend to be extremely steep. I don't think your credit file would look good if you're shown as being overdrawn on a monthly basis but sensible use of a credit card being paid in full every month looks better! I'm fresh out of a TD and looking to improve my score and have had a credit card for the past few months, using it for something each month and paying it off straight away. My credit report has a nice green tick for that next to the defaults that I'm slowly trying to get rid of.

If your bank is happy to give you an overdraft facility then there is nothing to stop you taking that up.

Overdrafts are a useful buffer for temporary cashflow issues and can help avoid costly banking charges, though if it is being used every month then it can be an expensive way of using credit. I'm not sure how much use of an overdraft will improve your credit score to be honest.

Hi sjm750.

I don't claim to be an expert on credit ratings, but I'm not sure that using any type of credit prior to being discharged is going to help you much in the future.

Overall, I'm not sure that the questionable benefits justify the risk.

Having worked in a bank in the past I might be able to shed a little light on what is meant when your bank offers an overdraft which might be of interest to people reading this thread.

1st off, the rules on this were changed just before I left the industry which suggested, under responsible lending process of the Ombudsman, that banks should not offer overdrafts without being asked by the customer first and should certainly not pre-approve you for one as this is encouraging unstructured lending (no repayment process in place as it is effectively open ended lending which at most is reviewed yearly).

How it works. In essence the bank I worked for (IT was one of the biggest worldwide) would indicate, based on your account behavior (money going in v's money going out taking into account how long you have been with them, savings, spending patterns etc) what a customer is likely to get as an overdraft. This is what they used for the approved overdraft statement as the systems they use suggests you can have one!

I stress this was only an indication. It was no guarantee of the facility.

In order to get one you would still need to go through an application including credit searches etc. Now, I also know, this is not always the case in all banks but from my understanding it is the process followed in the vast majority of them.

What this means is, in all likely hood you would, given you have a PTD on your credit files, fail a credit score. It also alerts the bank (although probably not the person making the application for you in the bank at the time) that you have a PTD in place. Ultimately that offered overdraft is suddenly no longer offered.

The worry from this point is, if the bank is alerted to previously unknown PTD, it may be deemed as a breach of their T&C's prompting them to close the account which might suddenly put you in a very difficult position.

If nothing else I am sure this will give you some food for thought!

Oh... I should also advised that Pre-Approved credit cards as still subject to a credit check (check the fine print as it will be listed here that this is the case!) so, again, with a PTD on fine you are very unlikely to be accepted and if you are the APR you will be looking at will most likely be ridiculous.

Thanks for sharing that colski.

It's really useful to get views from people who have worked in particular industries.

Between the hundreds of people that visit the site daily there's a huge amount of knowledge and experience to be shared.

A really useful post colski. Thanks for taking the time to post it.