Arrangement to Pay (AP)

Hello guys!

I'm back from a long break, how have you all been? I hope no one have been missing me!

I will get the CRA's information updated as soon as possible, and start a new thread shortly. So Underground, just bear with me!

I have started a new thread on the subject of 'Arrangement to Pay' that some lenders report to CRA's.

AP has not been widely discussed so out of curiously, how damaging is AP on credit file? I know for a fact some lenders would accept payment plan to pay back debt like freezing purchase interest on account, but often do not discuss/inform to customer that accepting such plan would mean serious damage to their credit worthiness as a result.

Is it on par with one late payment or more?

Does it continue to affect credit worthiness for as long as 6 years?

I used to have several of them with 02, but they have removed the default and data off my credit files so i am lucky.
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Comments

  • Innocent_Guy
    Innocent_Guy Posts: 5,369 Forumite
    I think it stays on your file for 6 years
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  • Doshamento
    Doshamento Posts: 230 Forumite
    noah271007 wrote: »

    AP has not been widely discussed so out of curiously, how damaging is AP on credit file? I know for a fact some lenders would accept payment plan to pay back debt like freezing purchase interest on account, but often do not discuss/inform to customer that accepting such plan would mean serious damage to their credit worthiness as a result.

    Is it on par with one late payment or more?

    Does it continue to affect credit worthiness for as long as 6 years?

    It is worse than one late payment or more...if registered with the CRA's.

    Any debtor needs to clarify with the lender if any AP is to be registered with any Credit Ref Agency before any arrangement to pay an outstanding debt.

    If it is registered to the CRA's by the lenders, then in the eyes of any creditor :-

    an AP is equivalent to a 'default' with any prospective lender..........and will make borrowing almost impossible for the next 6 years of onset.
  • noah271007
    noah271007 Posts: 1,248 Forumite
    Not necessarily 6 years as long AP recorded on account that are open and active. Experian remove last late payments/AP markers after 3 years on data payment history and Equifax 4 years.

    How damaging is it having a AP? Is it on par with 1 late payment or on par just above default?
  • never-in-doubt
    never-in-doubt Posts: 20,613 Forumite
    noah271007 wrote: »
    Not necessarily 6 years as long AP recorded on account that are open and active. Experian remove last late payments/AP markers after 3 years on data payment history and Equifax 4 years.

    How damaging is it having a AP? Is it on par with 1 late payment or on par just above default?

    AP is on par with a default/ccj/6+ late payments in that lenders will not touch you until it has gone which is 6yrs after the registered date (usually 3yrs show on a/c history with CRA's)

    A/P is a bad thing don't be fooled by the myth that lenders see it as a good sign, they do not!
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  • Doshamento
    Doshamento Posts: 230 Forumite
    noah271007 wrote: »
    Not necessarily 6 years as long AP recorded on account that are open and active. Experian remove last late payments/AP markers after 3 years on data payment history and Equifax 4 years.

    How damaging is it having a AP? Is it on par with 1 late payment or on par just above default?

    Same as 6 years (default time) to a lender.

    The marker sign of AP in RED, whether 1 month of late payment, or several months of good payment afterwards will still 'flag' warning similar to a 'default' message to other lenders, if the lender has entered an AP onto your credit file.
  • noah271007
    noah271007 Posts: 1,248 Forumite
    Doshamento wrote: »
    Same as 6 years (default time) to a lender.

    The marker sign of AP in RED, whether 1 month of late payment, or several months of good payment afterwards will still 'flag' warning similar to a 'default' message to other lenders, if the lender has entered an AP onto your credit file.

    Thanks for your replies and efforts guys - it is certainly an eye opener, and for anyone who are considering different payment terms on account like freezing purchase interest should confirm with lender before agreeing to it.
    Get them to put in writing they will not send adverse data while on repayment plan.

    How bad is 3\4 months late payments? I got a friend who have several of 3s and 4s in 7 month period on credit card account back in Nov 2005.
    He has not missed further payments since.
  • newlywed
    newlywed Posts: 8,255
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    AP is on par with a default/ccj/6+ late payments in that lenders will not touch you until it has gone which is 6yrs after the registered date (usually 3yrs show on a/c history with CRA's)

    A/P is a bad thing don't be fooled by the myth that lenders see it as a good sign, they do not!

    Is it 6 years after it starts? or 6 years after you finish paying it off that it shows? :o

    On a DMP so my rating is shot anyway - but suspect that the AP might stay there longer than the default notices, if it stays till it's paid off :o

    That's why it makes me laugh when one of my creditors makes out they are doing me a favour by charging me a low interest rate and promising not to adversely effect my credit rating - with 2 defaults and an AP I don't think another default would make any difference!!
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  • noah271007
    noah271007 Posts: 1,248 Forumite
    newlywed wrote: »
    Is it 6 years after it starts? or 6 years after you finish paying it off that it shows? :o

    On a DMP so my rating is shot anyway - but suspect that the AP might stay there longer than the default notices, if it stays till it's paid off :o

    That's why it makes me laugh when one of my creditors makes out they are doing me a favour by charging me a low interest rate and promising not to adversely effect my credit rating - with 2 defaults and an AP I don't think another default would make any difference!!

    AP entry is on the payment history conduct of an account. If account remain open and active then it will drop off after 3 years in the case of Experian and 4 years with Equifax.
    However if you settle an account with AP marker before it drops off, then the payment history conduct will be on view for lenders to see for 6 years!

    Is it correct that lenders disgard any adverse data that are more than 6 years old when considering application?
  • king100
    king100 Posts: 1,565 Forumite
    Do they have to inform you legally that by accepting this that an arrangement to pay will be on your credit file?

    And what is the legal definitation of arrangement to pay?
    I all have learnt is from others on many sites.
    Seek legal help if unsure.
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  • izools
    izools Posts: 7,513
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    edited 23 July 2010 at 11:40AM
    noah271007 wrote: »
    Hello guys!

    I'm back from a long break, how have you all been? I hope no one have been missing me!

    I will get the CRA's information updated as soon as possible, and start a new thread shortly. So Underground, just bear with me!

    I have started a new thread on the subject of 'Arrangement to Pay' that some lenders report to CRA's.

    AP has not been widely discussed so out of curiously, how damaging is AP on credit file? I know for a fact some lenders would accept payment plan to pay back debt like freezing purchase interest on account, but often do not discuss/inform to customer that accepting such plan would mean serious damage to their credit worthiness as a result.

    Is it on par with one late payment or more?

    Does it continue to affect credit worthiness for as long as 6 years?

    I used to have several of them with 02, but they have removed the default and data off my credit files so i am lucky.

    To set some facts straight about arrangements to pay:

    Arrangements to Pay are the least damaging of all "adverse" data. They are almost on par with being late or in arrears but considered less damaging by lenders as the borrower has clearly addressed the situation and come to an agreeable solution with the lender, as opposed to blatantly violating the credit agreements.

    Different lenders weight Arrangements to Pay very differently.

    As an example, my mother has held a Barclaycard in an Arrangement to Pay for seven years. This is how it appears on her Experian and Equifax credit reports (respectively):

    sTT2d.png
    iaM4X.png

    Since she has had the card in arrangement to pay, she has been instantly approved for the following accounts:

    RBS Current account (Dec 2007)
    RBS Mastercard, £2,200 Limit (May 2008)
    RBS Mastercard, £3,000 Limit (June 2008)
    Virgin Mobile Contract (December 2008)
    Sygma Silver mastercard, £1,000 Limit (March 2010)
    Sygma DAYS mastercard, £1,000 Limit (March 2010)
    Sygma Creation Mastercard, £2,000 Limit (June 2010)
    Orange Mobile and Home Broadband contracts (June 2010)

    She has been instantly declined for the following accounts:

    Egg Credit Card
    Halifax Credit Card

    She has been referred and subsequently declined for the following accounts:

    Post Office Credit Card
    MBNA Rate for Life special

    As can be seen some lenders interpret AP's in a positive light, some in a neutral light, and some in a negative light.

    As long as the rest of your credit profile is excellent an AP shouldn't stand in the way of all but the most stringent lenders - as has been bourne out in my Mother's case :)

    One other thing that is important to note, is that some lenders report accounts that are in an AP differently.

    As can be seen from the example - the Barclaycard was reported as paid on time and up to date whilst in an AP. However, my Provident loan was also in an AP, but concurrently reported as being in arrears:

    UW2W5.png

    Now... Provident don't report to Equifax. If they did, the account would not appear as in an AP whilst also being in arrears, rather the months would be marked with a "AP" marker and nothing else as the Barclaycard account was.

    As you can assume the way Barclaycard report arrangements has a significantly less detrimental effect to the way Provident do. in regards to Experian, there are three ways to report an AP:

    a. With the Arrangement marker and account in arrears (AKA Provident)
    b. With the Arrangement marker and account status undisclosed (AKA Home Shop Direct Group)
    c. With the Arrangement marker and account status paid up to date (AKA Barclaycard)

    All three are acceptable ways of reporting AP's to Experian, as you can imagine the first way has a significantly more detrimental effect than the other two.

    Equifax and Call Credit do not work like this, they allow the lender to report the account in an Arrangement or in arrears, not both so a lender who searches Equifax (I.e. sygma bank) would not be able to differentiate between the three ways of reporting, those that search Experian would.

    Hope this helps!

    EDIT: With Equifax, the AP statuses show for four years. Once the account has been out of an AP for four years there will be no record of it having been. Call credit, same but three years. Experian, the special instruction indicator will stay there for six from the date the account was settled. The status codes depend on whether the lender goes for option a, b, or c above, and are recorded for three years.

    I have now raised a dispute with Experian and Provident re: getting the status codes amended, given that I stuck to the AP, and will let everyone know how I get on :o
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