Another Credit question

CJ1983

Hi All,

Firstly, first post, nice to be here etc. Useful little community I've stumbled upon.

I'm in a weird situation, and not really able to work out where I stand with getting a mortgage.

I have followed the process of buying a house up to the point at which I need to actually apply for the mortgage, and have, naturally, just gone to check my credit file.

There is a late payment that I knew about on there, Capital one, paid a few days late, unfortunate, but unavoidable. My credit limit is low anyway, and the payment was for a low amount (about 30 quid).

There is also a string of entries from Virgin Media, which they have been issuing since I disputed a payment with them in January (they failed to disconnect me when I asked, and have been trying to charge since). They should really have stopped altering my credit file whilst investigating the dispute, but they didn't, and it's most annoying because they actually concluded that they had made a mistake. I've written a letter to them to ask that they correct my file, and hopefully they will, although I'm not holding my breath. If not I guess I'll have to note the account and dispute it with Equifax.

The real issue here is, I'm borrowing 150,000 from a lender, don't know who yet, but it seems like even if I get this mistake on my record corrected, I could lose this house over it.

I find it hard to believe that over a legitimate disute over nothing more than about about £30, I could be looking at being unable to get a mortgage? Is there no common-sense involved in these decisions? An adviser I spoke to told me that two defaults may be difficult, where one could've been ok. But can it really be the case that these two - let's face it - minor issues, one of which is wrong anyway, could cost me the ideal house that my offer has been accepted on?

I don't think I can get VM to amend the record quickly, so how much scope is there for just *explaining* this situation to the relevant folk, be it broker or lender, and having that count in my favour. Even if I still owed both the CC default, and the VM amount, my debt would still only be £60. Hardly Al Capone's tax bill is it?

I'm fairly new to the mortgages market, but it seems to me that if it works as I suspect it might, I'm screwed over a matter of an admin mistake and £30.

I really like this house, so hopefully someone on here can give me a bit of hope, and maybe some useful advice?

Many thanks

cJ

CJ1983

Oh yeah, and two extra bits of info.

I'm buying with my fiancee, who has a blameless credit report, with sucessful borrowing and no defaults or anything bad, and

my deposit is £27500, which makes it an 85% LTV.

erimus1

Hi there - the credit reporting in this country really is terrible and unjust. However, although sometimes long winded , there are things that you can do. Removing defaults from disputed accounts is difficult in most cases and takes along time. I have removed five defaults in my time though, so it is possible.

However, in your case, I would just do a little legwork and find out which of the credit reference agencies is reporting the default (I sincerely doubt that they all are). You may well find that there is at least one that is not reporting this default, then allowing you to use this information to your advantage. You then need to find a lender that only searches that particular file. Reasonable straight forward.

As far as the late payment is concerned, given that it was only a few days late, I would try and get this removed by the creditor. I have had this sort of late payment in the past and not shown any late payment. Many companies give an amount of leeway for these payments. If this does not work then perhaps you would like to attach a note on your file explaining the circumstances around the late payment and outlining that it was only a few days late.

Adding any notice to your credit file means that any company searching for the sake of a credit application is legally bound to manually underwrite the application and actually read what is on the file - takes a little longer than the automated searches but may well be worth it.

One late payment will not really affect you after six months if the rest of your credit is good though. Do an internet search for underwriting procedures for mortgages - this may give you some idea of what is acceptable by some companies.

Hope this helps.

CJ1983

Thanks very much!

In light of what I've said, is there a difference between default and late payment? I've been reading through as much as I can on here about the issues of credit with mortgages and they seem to get used interchangably?

Is it possible that some lenders just won't care about the odd few-days late payment? It seems to make sense for them to really bother with refusals to pay, inabilities to pay and large amounts, rather than the odd accidental late payment, quickly resolved.

The issue with VM is going to be the annoying one. It looks on my credit report like I didn't pay my broadband bill for four months, whereas actually, as I said, they had just failed to process my cancellation request, and failed to note that I was disputing the validity of a payment.

You're right that the credit rating system in the UK is a bit broken and unjust. In my mind, if a payment is disputed, the service provider or creditor should be unable to add entries to a credit file about it until after the conclusion of the investigation.

Thrugelmir

CJ1983 wrote: »

Is it possible that some lenders just won't care about the odd few-days late payment? It seems to make sense for them to really bother with refusals to pay, inabilities to pay and large amounts, rather than the odd accidental late payment, quickly resolved.

There's no excuse not to pay the minimum balance by direct debit. A careless late payment is indication as to how a borrower approaches management of their personal affairs. In these constrained lending times very easy for lenders to raise the bar to filter out mortgage applicants. In effect your competing with other people to obtain a mortgage.

erimus1

CJ1983 wrote: »

Thanks very much!

In light of what I've said, is there a difference between default and late payment? I've been reading through as much as I can on here about the issues of credit with mortgages and they seem to get used interchangably?

Is it possible that some lenders just won't care about the odd few-days late payment? It seems to make sense for them to really bother with refusals to pay, inabilities to pay and large amounts, rather than the odd accidental late payment, quickly resolved.

The issue with VM is going to be the annoying one. It looks on my credit report like I didn't pay my broadband bill for four months, whereas actually, as I said, they had just failed to process my cancellation request, and failed to note that I was disputing the validity of a payment.

You're right that the credit rating system in the UK is a bit broken and unjust. In my mind, if a payment is disputed, the service provider or creditor should be unable to add entries to a credit file about it until after the conclusion of the investigation.

In theory, you can be defaulting on a credit agreement with just one missed payment. However, this interpretation would not be applied as defaulting and merely shown as a late payment on your credit file. As I previously stated, different creators have differing policies in what by deem to be a late payment - more often that not, it would only be shown as being on payment late when the next payment is due - effectively allowing a payment to be in hand for credit reporting purposes.

A 'default notice' is what is applied on your credit file to show that there has been a default on th account. These notices, according to ICO guidelines should be placed on credit files when an account s between 3 and 6 payments late.

Not wanting to be a drag but it does Lund like you didn't pay your broadband. You say you asked to cancel. Under their terms and conditions, did you have the right to cancel, and f so, did you adhere to their cancellation policy correctly? If th answer is no then you were in breach on contract and they were accurately reporting.

CJ1983

Right, well, the broadband story:

I had internet with VM, and because I was leaving the property, I called and asked to cancel it, was put through to the cancellation department, who did the usual questions about whether I'd prefer to transfer, whether I'd considered their special offers etc, and then went on to take the details to cancel the account. I updated my address with them and asked for the final bill.

Instead of receiving the final bill in January (the next month) I received the same routine bill as usual, so I called to see what was going on, and was told it was my final bill, so I paid it.

Two months later, I started getting daily phone calls asking for payment otherwise they would cut off my broadband, which I had already cancelled. Most times they called, I explained the situation, and that I disputed the payment was actually due, that I believed an admin error had occurred etc.

Two months after I started trying to sort this all out by disputing the payment, I got a phonecall from a very helpful guy who admitted that a mistake had been made, recalculated my actual payment, apologised, took payment of the remaining few quid and cancelled the account.

I have since double checked it is cancelled.

So, no, I didn't fail to pay my broadband, my cancellation just got either misprocessed, or not processed at all, through some error. I have a very common name, and so this kind of thing sometimes happens, and it's a damned pain when it does. Virgin did, however, admit that an error had occurred, and put it right, however, they had by then altered my credit record quite adversely.