Out of the blue Debt destroys credit rating!

it_was_me

Hello,

I have been steadily building up my credit rating and up to last month I was doing ok. Ive just cleared a £15,000 car loan 2 years early and my score had increased.

Over the last few months I had been contacted by Lowell Debt Collections on behalf of the Three network. They claimed I owed £670 from a mobile contract over 4 years ago. I was fully aware of the contract, however at the time it was settled because the charges related to my phone being cloned in the caribbean while I was on detachment to with The RAF. I had heard nothing from three after is was settled 4 years ago and as far as I was concerned it was clear. When I tried to contact three they claimed they had no records of the contract being cleared 4 years ago and would not talk to me about it because the debt had been sold to this debt collection agency. They had not contacted me until this year. The letter even started "You may not have heard from us in a few years, however we have been going over our records." !!!

I could not prove 4 years on that the account had been cleared as I thought and was told I had to pay. I did this becuase I was shortly being deployed to Afghanistan and was told it was the only course of action I had.

Having done this my credit files have been updated with lowell debt collection agency stating a defaulted account on my file. The Three account was never present on m credit file and had never even had a defaulted notice put there. It has destroyed my credit rating completely. They may as well have just shot me. I'm and RAF Officer, I have been doing ok with my crdit rating and I'm on a good wage. My credit rating dropped from 860 to 550!!

Please help. I have no idea what to do and cannot believe that an old account from 4 years ago has destroyed my credit rating. Especially as it stays on my account for 6 years min! I know I settled that mobile contract years ago and I was rail roaded into paying it off, by being promised it was easier just to pay, but I never would have done so, so easily if I knew it would have such and effect! Now I have been crucified for it.

Please, please help.

NeverAgain_2

...They may as well have shot me...now I have been crucified for it...

Others on here will be able to advise more fully, but are you not taking this a little too much to heart?

It's only a dispute over a few hundred pounds.

You say you earn a good wage and have paid off a car loan early.

I don't understand why a perfect credit rating is so important to you.

My credit rating means nothing to me because I don't borrow money, other than 'monthly' on a credit card.

They are handy for hotel bookings and so on, but I imagine you can still use yours if you want to.

You work hard for the good wage, try to relax a little and enjoy the security that brings.

As regards sorting out this debt, I think the first stage may be to make it clear you dispute it, and then ask the debt collector for proof of what they claim you owe.

it_was_me

Hi NeverAgain,

I know it may seem like a small thing, but its really hit us hard. We have been trying to incrase my credit rating for several years now and had finally got to a good position.

For the majority of my earlier years I had struggled to get any form of credit history. I was told and a routine basis that I couldnt get credit because I had no, "Credti History". Then when I joined the RAF, my parents moved to Florida. This meant I was having to use RAF Stations as my official address for nearly 6 years. Unfortunately these addresses are not registered with the credti agancys and therefore I found practically impossible to get any form of credit.

It was only with my increase in wage and subsequently getting married that finally led to my credit score increasing to a good level. We have been working for the past 3 years to get it to this state as we soon intend to buy a house and start a family. We had two mortgage offers, both of which have now been declined. Only one company (HSBC) has come back and gave the reason being as, "Recent Adverse activity on my credit file". The other, merely refferred me to Equifax.

It has literally set us back 6 years for something that not only have we payed, but are sure we didnt owe in the first place. we just couldnt prove it and were railroaded. Also this Lowell Debt Collection Agency has told each credit reference aganecy something different. Equifax has been told the account defaulted in 2007 and was settled in Jan 2008, yet CallCredit have been told it defaulted Oct last year (4 years after the Mobile contract) and is STILL Defaulted, despite the fact we have paid it.

There must be a way of sorting this.

If anyone knows, please let us know too.

Thank you

Pete

NeverAgain_2

...We had two mortgage offers, both of which have now been declined...

I take it you've tried approaching HSBC to explain the situation?

A few hundred pounds, disputed, a good few years ago, doesn't seem like a reason not to proceed with a mortgage offer already made.

But then, I'm not lending the money.

The fact you also had another offer is encouraging, because it means your application is a realistic and doable one, apart from this disputed debt.

workinonit

give the guy a break. He's worked hard to build something that seems has been unfairly taken from him. Clearly it's important to him in a practical way as two mortgage offers have been taken away.

Surely in the couple of months you've been on here it's clear that just because it's a mistake, or only a small debt, doesn't mean it won't cause a problem.

If everyone on here that had a default applied incorrectly just had to call up and say "oh that's wrong, fix it, thanks" there would be a lot less threads on here.

I'd take it to heart too.

Hannah_10

Firtly Pete it might be best to go back and take your last name out of your first post. You can do this by clicking the edit button underneath your post. I understand the pressures of armed forces life, having been an army wife, including living on the RAF "pad" twice. What perhaps other MSE'ers don't know is that while debt does not officially affect a military career (unlike say, a career in law) the general perception of ones character can have a bearing on ones promotional chances. The best thing to do is simply don't mention it, the RAF do not have the power to check your file. Also owning a house becomes rather more important when you have a spouse or children as a military quarter (provided house) can be removed sometimes at as litle as 28 days notice and the normal eviction rules do not apply. Also it is not at all unusual to be relocated every 6 months to 2 years. While an RAF officer does earn good money, in contrast to a similar civilian role (for example a commercial pilot or an engineer) the hours worked for pay accrued are quite unfair, but then this is the case accross the armed forces, infantry soldiers are starting on 12k p/a and going straight into battle on that!

Now, that said, while I have great sympathy for the position you are in Pete and I do want to see you discover a good solution I have to say the posters who say you are over reacting do have a point. This may feel to you to be a life changing event but in fact it is not. At the worst case scenario this could only affect your ability to get credit for another 2 years and you should have the money to settle it in one go up front. Many would struggle to find £50 a month spare and would take years to clear £670), you could probably have it done by the end of lunchtime if that was your choice. This adverse entry could only affect you for a further 2 years because information over 6 years old must by law be removed from your credit files.

Another common mistake is to think that lenders are affected by your credit "score". They are not. They do not see your credit score, this is like a hypothetical excercise on the part of the Credit Reference Agencies. It generates revenue too, they charge you to see it. Everything a lender can see is on the Statutory Report, which you can recieve on paper for £2 or can often see online for free. As you can see your "score" you must have a credit card, if your situation was that bad you'd have lost that credit card by now, which proves it really isn't.

You say no record of this hit your file for 4 years. Are you sure? There are 3 CRA's in the UK and they all hold different information. While the public perception is often that one only needs to look at Experian, one does also really need to see ones Equifax and Call Credit files. Put a .co .uk on the end of any of those for the websites. It may be the case for example that this has been on your Equifax file the whole time and the lenders used Equifax to evaluate your mortgage applications. You can do the same in reverse, a lender has to tell you which CRA it uses, and so you can be just as choosy about who you apply to. As I said though unless you feel you simply must have a mortgage right now there isn't a lot to worry about, spend another 2 years putting your money into a high interest savings account and start with a greater deposit instead. In fact saving for a house is very popular among the "men", as an officer you should be equally savvy.

To dispute a debt you would start with the Prove It letter below. Also read The Golden Rule. It's not a simple process to dispute a debt and it can take a while. Paying it is easier, although unfair and if you do pay it you can not dispute it in retrospect. It is your choice.

Hannah_10

1 High Street,
Newtown,
Kent
R21 4RH
October 9, 2007

The Loan Company
Company House,
Church Street,
Newtown,
Kent,
R1 7HG

Dear Sir/Madam

Ref: xxxxxxxxxxx

You have contacted us regarding the account with the above reference number, which you claim is owed by ourselves.

We would point out that we have no knowledge of any such debt being owed to The Loan Company.

We are familiar with the ‘Office of Fair Trading Debt Collection Guidance’ which states that it is unfair to send demands for payment to an individual when it is uncertain that they are the debtor in question.

We would also point out that the OFT say under the Guidance that it is unfair to pursue third parties for payment when they are not liable. In not ceasing collection activity whilst investigating a reasonably queried or disputed debt you are using deceptive/and or unfair methods.

Furthermore, ignoring and/or disregarding claims that debts have been settled or are disputed and continuing to make unjustified demands for payment amounts to physical/psychological harassment.

We would ask that no further contact be made concerning the above accounts unless you can provide evidence as to our liability for the debt in question.

We await your written confirmation that this matter is now closed. Otherwise we will have no option but to make a complaint to the trading standards department and consider informing the OFT of your actions.

We look forward to your reply.

Yours faithfully

(Sign it in a curly font or have your wife sign your name so it's nothing like your own signature. This is a precautionary measure to protect you from fraud later and keeps open a possible get out clause where the phone company have not kept proper records- happens often.)