Defaults

leereni

Ok can someone please clarify for me the following on defaults/late payments?

I have 2 files on my credit report which are giving me cause for concern.

1. Small loan amount which I settled 4 years ago, however 6-7 months prior to this the account shows "666666".

2. I had another loan which I settled August 2011. For 18 months prior to this I was up to date with payments however prior to this time again showed "666666".

Firstly, are these looked at by lenders as defaults or late payments?

Also given the first was settled 4 years ago and the second was settled almost 2 years ago and prior to being settled I was on time 18 months, will this be a big problem with lenders.

My partner and I earn about £50000 and we are looking at a property for 140000 on the newbuy scheme.

I'm getting really worried because if we can't get this then it's going to mean several more years renting and I'm not getting any younger. I have no other debt and both our jobs are secure.

leereni

Any idea on the above please?

kingstreet

They are not defaults based on that information.

They are accounts showing six months payments missed, or only part paid.

A defaulted account shows a status of "8" and the word "default" but TBH I'd be surprised if there wasn't a default registered after six months arrears.

ValHaller

leereni wrote: »

2. I had another loan which I settled August 2011. For 18 months prior to this I was up to date with payments however prior to this time again showed "666666".

Were you up to date with this one according to the original terms - or did you get into trouble with it and negotiate something different?

If you paid according to the original terms, you need to challenge this.

leereni

They are some time ago so not too sure but definitely not showing as an "8" on my report. The first one I have asked the CRA to dispute anyway as the company state I owed £6 for the 7 months. Very highly unlikely. Please, I'm not going to delay paying a mere £6 in order to settle an account.

leereni

BTW when you say a default registered, what do you mean by registered?

kingstreet

When you fall into arrears with a regulated credit agreement, the lender issues a default notice, a letter which explains that if you do not return the account to credit, a default may be registered against you on your credit history.

If you miss, or only part-pay, three consecutive monthly payments, the lender is highly likely to inform a credit reference agency that your account is now in default. This will result in the word "default" being marked on the account and the account status changed to "8."

Such a default is visible on your credit history for six years from the date it is added to, or registered on, the system by the creditor.

leereni

Ok thanks for the above.

I've never received one from the smaller loan company, so will be raising this with them.

Also, none of my accounts have any "8"s registered against them so this won't be a default then?

Thanks again.

kingstreet

If an account has fallen into default, I would expect a number of default notices to be sent out before the default is actually registered. These are letters quoting the Consumer Credit Act 1974 and would be headed "Default Notice".

They are to notify you that action will be taken if the required action is not taken by you.

If the word "default" or the status "8" does not appear in the account on your credit history, it is not a default.

For example, on an Experian credit file, section C has credit agreements. If defaulted, to the right of the account details, you'll find "default date - dd/mm/yy," the "default balance £" and the date the account was last updated.

In the section sub-headed "Account Status Codes," you will find boxes for 25-36 months, 37-48 months and so on. A defaulted account will show the 8s, I mentioned, possibly a few ???s too.

At the end of the file, there is an information sheet, headed "Credit Account Information" and on it, it tells you;-

"Fig 2 Account Status Codes Explained

1-6 Payments are between one and six months behind schedule
8 - Account is in default. You failed to keep to the credit agreement and have not responded satisfactorily to requests to bring payments up to date. The credit agreement has ended.
? - The lender cannot give the account a status for this month."

leereni

Ok thanks for researching that for me. It definitely confirms I have no defaults. Hopefully the lenders will see it in this way.

Thanks

kingstreet

If these issues are historic, and are due to fall off your credit file in the next year or so, they will be less significant to a lender.

However, recent arrears on a high loan to value case will be a potential problem.

If this surrounds an issue with a creditor, have you considered adding a notice of correction to your account. It would ensure a human being looks at your case, rather than an automatic credit score decline?