Can they do this?

EHL123

My husband bought a laptop from Dixons in 2000 and took it on finance to be paid over two years (can't even say he was young and stupid at the time, he was 30!). The finance was provided by HFC Bank and they collected the payments by direct debit every month. As far as he was concerned, it was all paid for and finished with in 2002 as planned, and he's had no correspondence from HFC since then.

He's just got a copy of his credit file and not only is the account still showing on his file, but it's still showing as fully 'active' and in arrears by £320. Every month for the last three years they've logged the status as 6 months in arrears, and it's probably been like that since 2002! He's adamant that there was no outstanding balance, but even if there was, shouldn't it have disappeared off his file after six years? Or can a company get around that rule by keeping the account active like they have, and never actually defaulting it? And, if so, shouldn't they be sending regular letters/statements chasing the outstanding sum? It seems a bit sneaky to me - if he hadn't got his file it could have carried on like this for another eight years with him none the wiser. If a company can do this, why do any of them bother to register a default knowing it'll disappear after six years and they'll never get their money, when they could keep it going indefinitely?

If he mistakenly left a balance we've got no issue with paying it off, but he says he's sure he didn't. The DD's were £40 a month so he would have needed to miss 8 payments out of 24, and he didn't cancel the DD, they just stopped taking it. He's going to write to them to dispute the sum but I'd just like to know where we stand with regards to the big red 6's all over his credit report for the past eight years?

Thanks in advance.

DarkConvict

I would have expected this account to drop his credit file.

Since you have not paid since 2002, any payment outstanding is covered under statute of limitations (i.e. statute barred) so does not have to be paid anyway.

Have a word with the credit reference agencies about the data, if they do not remove it, you may need to talk to the ICO, given the people marking your file do not seem to car.

Consumerist

EHL123 wrote: »

He's going to write to them to dispute the sum but I'd just like to know where we stand with regards to the big red 6's all over his credit report for the past eight years?

If he gets no joy from HFC bank after an informal enquiry then he needs to start the bank's formal complaints procedure. Ask for a copy of it when writing the letter to them. The formal letter of complaint should be headed with the word "Complaint" so it is clear he is making a formal complaint rather than just a general enquiry.

Once you receive a "final response" from HFC, if you are not satisfied with that response then you can refer the complaint to the Financial Ombudsman Service to resolve. They can award compensation. You can ask the FOS to get HFC to repair your credit record. The service is free so you have nothing to lose.

Edit
From the HFC wesite :-

At HFC Bank we have developed a reputation for a quick and thorough response to your queries and we welcome the opportunity to address any issues you may have. We treat each complaint seriously in order to resolve any issues as quickly as possible, but there may be instances where we can not reach an agreeable solution. If your complaint has not been resolved once you have exhausted our internal complaints procedure you may contact the Financial Ombudsman Service.
For further details regarding our complaints procedure and details of the Financial Ombudsman Service please contact us on 0870 010 0453.

Hope this helps.

EHL123

Thanks that's really helpful. We're in Scotland so it seems that the limitation period is only 5 years, and after that it becomes 'extinguished' (aka ceases to exist). It's probably not worth disputing it then because of the time it will take, especially if it's going to be extinguished anyway.

Regarding his report - should the record drop off six years after the last payment was made (2002); or six years from the date it should have become barred/extinguished (2007)? Or should all record of it be removed completely because it's been 'extinguished' and therefore no longer exists?

Consumerist

You should ask HFC to clear your credit record. If they refuse, without good reason, then I would start the complaints procedure anyway.

It is my understanding that any default should drop off the credit file six years after the date of the default. The fact that these defaults continue, long after six years, suggests that HFC think they are still chasing you for the money.

In my view, it would not be wise to let this slide. It could remain on your file for another 6 years or indefinitely.

EHL123

When you say defaults, do you mean the red '6' markers? They've never actually put a default on (the 'default date' field is blank and the £320 is showing as a current balance rather than a defaulted sum), which I guess they've done so they can just keep the six years running indefinitely as you say.

The report doesn't show an account number so I've raised a dispute with Experian and asked for them to send it to us so we can write to HFC. If we haven't had a reply by Monday we'll just send the statute barred letter with 'account number unknown' and they can search by the address instead. At least we know it's definitely statute barred (well, the Scottish equivalent) because he's not made contact with them for eight years and the limit is five. So it looks like it'll just be a case of getting the arrears markers taken off. Even if they'll only remove the ones after it became statute barred that would help, because that was three years ago (I don't think any of the agencies show payment histories for longer than three years? Could be wrong through).

We're not planning to get anything on credit for a while anyway, but our fixed rate mortgage ends in 5 years so we want to make sure our records are squeaky clean for when we remortgage (or hopefully move to a bigger house).

Consumerist

The string of numbers represents the last 12 months payments on your account.

A '6' means that your payments are 6 months or more late.

If you have a string of 6's then that means HFC thinks all your payments over the last 12 months are at least 6 months late. (i.e during 2009 & 2010)

If you were to settle the account tomorrow, those 6's will start to disappear over the next 12 months (until your payments have been on time for the previous 12 months) even if the account has been marked at satisfied (settled).

Accordingly, it is important to sort this out with HFC if you want your credit report to be repaired. You should establish how this situation has arisen. e.g. have you moved and forgotten to tell them or have you changed banks, etc.

Hopefully, it is merely a mistake they have made and in that case they should repair your credit record.

If they have made a mistake or you cannot agree who has made a mistake and they still refuse to repair your record then you should refer the matter to the FOS to resolve. Otherwise you are going to have a hard time getting further credit.