Can't get anything, may as well just default!

rtho782

So, currently my credit file has the following:

Zero missed or late payments, no overlimits etc.
Zero defaults, CCJs, etc.
Majority of accounts at least 2 years old, barring a 1 year old hire purchase agreement.
Same address for 8 years, on electoral role.

Live:
5 credit cards, all with small (£1000 and under) limits, all held at least 2 years, the usual subprime culprits. Paid in full every month.
1 HP agreement, 0% over 48 months, 1 year in, currently £4062 left.
2 Loans total £2500, both over 2 years old.
3 mobile phone contracts (don't ask) all but one at least 4 years old, never missed or late with a payment.
Overdraft, used most months, varies when reported from less than £200 outstanding to a max of £2k outstanding, depending on when in the month they feel like reporting. Limit £3k so never exceeding limit.

Settled:
2 HP agreements, paid early and in full.
2 Loans, paid early and in full.
1 Loan, paid on time in full.
2 mobile phone contracts, both paid off within minimum term.
1 catalogue account

So, up to now, you would figure that while I have a reasonably high level of debt, (varies month by month from £7k to £8.5k depending on when the various accounts report) with a £35k salary, it isn't too bad. You would think I should be able to start moving on to prime lenders! However, you'd be wrong, because there is one thing I have missed.....

I have a total of 12 payday loans, all paid off in time an in full, between 3 and 1 year old.

Previously this was fine as they showed as "Loan" on my report, but now experian has decided to retrospectively change them to "Payday Loan".

It seems, that this is every bit as bad as if I had defaulted on an agreement. I've put years of effort into trying to improve my credit file, and believed the advertising that they would report these loans to CRAs which would (and, indeed, did) have a postitive effect.

I'm seriously thinking right now that if I'm screwed for another 5 years anyway I may as well just default on my agreements and make it 6 before they get statute barred.

To me the retrospective nature of this change is a breach of the FSA principle of treating customers fairly.

Payday lenders should be forced to inform you before issuing a loan that the use of their service will effectively blacklist you from credit for 6 years. Or, a lender should just decide to go back to the previous regime where they did not report to CRAs unless there was a default, and win customers in doing so.

I don't suppose there is anything I can do besides emigrate or wait 5 years, but the fact that they screw you over retrospectively is completely unfair. Had it been like this at the time I'd never have gone near payday loans.

worried48

Blimey, I'm in a similar situation, had no idea I was quite so sub-prime (owe about 8k in total, no defaults, no late payments beyond one month), ended up with a Wonga loan recently because it was cheaper to do that than have my husband get a returned DD fee, and now I'm going to be credit file ruined for 6 years? Fan - bloody - tastic :mad: Is this really how it works now? The point is, it really genuinely CAN be cheaper to get a payday loan, as long as it's only for a very short time, than to miss a payment!

CLAPTON

It would be better for you to address the reasons for so many debt and payday loans rather than the fact that the credit agencies correctly record them.

Go over to the debt free wannabe board, post up full details of your income, spending and debts and see what suggestions there are for reducing spending and paying off the debts.

[Deleted User]

It's not an issue made by the PDL companies. It's a factor of how other lenders look at PDLs. And to be honest, to think that lenders would ever look favourably on people who can't live on their income, is foolish.

But their impact will diminish overtime. Far quicker than defaults would, I would imagine.

chalkie99

rtho782 wrote: »

So, currently my credit file has the following:

Zero missed or late payments, no overlimits etc.
Zero defaults, CCJs, etc.
Majority of accounts at least 2 years old, barring a 1 year old hire purchase agreement.
Same address for 8 years, on electoral role.

Live:
5 credit cards, all with small (£1000 and under) limits, all held at least 2 years, the usual subprime culprits. Paid in full every month.
1 HP agreement, 0% over 48 months, 1 year in, currently £4062 left.
2 Loans total £2500, both over 2 years old.
3 mobile phone contracts (don't ask) all but one at least 4 years old, never missed or late with a payment.
Overdraft, used most months, varies when reported from less than £200 outstanding to a max of £2k outstanding, depending on when in the month they feel like reporting. Limit £3k so never exceeding limit.

Settled:
2 HP agreements, paid early and in full.
2 Loans, paid early and in full.
1 Loan, paid on time in full.
2 mobile phone contracts, both paid off within minimum term.
1 catalogue account

So, up to now, you would figure that while I have a reasonably high level of debt, (varies month by month from £7k to £8.5k depending on when the various accounts report) with a £35k salary, it isn't too bad. You would think I should be able to start moving on to prime lenders! However, you'd be wrong, because there is one thing I have missed.....

I have a total of 12 payday loans, all paid off in time an in full, between 3 and 1 year old.

Previously this was fine as they showed as "Loan" on my report, but now experian has decided to retrospectively change them to "Payday Loan".

It seems, that this is every bit as bad as if I had defaulted on an agreement. I've put years of effort into trying to improve my credit file, and believed the advertising that they would report these loans to CRAs which would (and, indeed, did) have a postitive effect.

I'm seriously thinking right now that if I'm screwed for another 5 years anyway I may as well just default on my agreements and make it 6 before they get statute barred.

To me the retrospective nature of this change is a breach of the FSA principle of treating customers fairly.

Payday lenders should be forced to inform you before issuing a loan that the use of their service will effectively blacklist you from credit for 6 years. Or, a lender should just decide to go back to the previous regime where they did not report to CRAs unless there was a default, and win customers in doing so.

I don't suppose there is anything I can do besides emigrate or wait 5 years, but the fact that they screw you over retrospectively is completely unfair. Had it been like this at the time I'd never have gone near payday loans.

Great, so you have your goods which are HP repossessed, have your mobiles disconnected and get chased by lots of lenders.

Why do you think the loans will be statute barred after six years?

You are currently paying them all and you would have to avoid contact with the lenders for six years from the time you default for you to hide behind the law. They do not become statute barred simply because you stop paying. the lenders can get a CCJ against you during that time and then you'll be screwed again.

JimmyTheWig

I agree with Clapton and zx81 - get your debts down, don't take on any new credit and in a year or so I bet people will be happy to lend to you.

rtho782

My debts are going down, hence the early paid loans etc. I only use one phone, one ends in march, and the 3rd has had notice given on it and is in credit equal to the remaining line rentals. I'm not struggling financially and have money left over every month that is currently clearing my debts. Of the remaining two loans, I am snowballing one right now with money saved from clearing another, and the DD is currently over double what it has to be.

I haven't gone near payday loans in over a year, because of this change. They may be "correctly recorded" now, but they were also correctly recorded before - they were loans.

My HP agreement also says "Loan". Does this mean it is incorrectly recorded? In my opinion it is not, and neither were PDLs reported as "Loan".

My central issue here is the retrospective nature of this change. You are right, were I to default on everything, my motorbike would be reposessed and my phones cut off. However, were I to default on my overdraft, credit cards, two unsecured loans, and the two phones I don't use, very little would happen except some phone calls and letters I could ignore. Yes, they may get a CCJ, but even these are removed from my credit file in 6 years and companies give up trying to enforce them when it stops being cost effective.

In fact, I'm not altogether convinced anyone would be very likely to to go court and get a CCJ for some of the smaller agreements.

In reality, I wouldn't do this. It just annoys me that there is almost no reward for paying, and I feel like had I been late or defaulted on an agreement, I would be no worse off than I am now.

Angry_Bear

You could try writing to Experian and complaining, especially if you have evidence that the advertising stated that taking these loans would help your credit file.

You could alternatively add a "notice of correction" to your report stating that you took out the payday loans to build your credit report based on advertising promises.

It may make no difference, but it costs nothing to try.

JimmyTheWig

rtho782 wrote: »

It just annoys me that there is almost no reward for paying, and I feel like had I been late or defaulted on an agreement, I would be no worse off than I am now.

I would be interested to hear if you still think this in a year's time.
If you default now then that is your credit scuppered for 6 years.
If you carry on paying the debts off as quickly as it sounds like you are, and avoid any further PDLs, then I think in a year's time you will be able to get standard credit.

I'd also suggest closing some of your unused credit cards, by the way.

JimmyTheWig

Angry_Bear wrote: »

You could try writing to Experian and complaining, especially if you have evidence that the advertising stated that taking these loans would help your credit file.

I doubt that this evidence will be available. Even when recorded as "loans" there is nothing to guarantee that it would help someone's credit file. So I can't imagine them claiming this.

You could alternatively add a "notice of correction" to your report stating that you took out the payday loans to build your credit report based on advertising promises.

Might help, I guess.

droiderm

I think your wasting your time.
It's factual - I don't see why they would could be made to remove it.

As someone else indicated I would definately avoid the defaults, especialy if your just choosing to do it, out of some kind of unhappiness with how lenders view PDLs.

The fact is you don't know how lenders view them, how long they consider it as a bad thing. I doubt very much they will view them as badly as defaults.

Why did you use them in the first place? You have to agree it doesn't demonstrate financial competence? Would you be fighting to lend your money to someone who quite recently used a PDL? I am not judging, just asking you to think about it.

Why is it bothering you so much that you can't get prime credit at this time? It's not that big a deal. Unless your desperate, which points to another problem entirely.