Mortgage advice needed please

Bargie

lufc7 wrote: »

This is all incorrect OP is right that the defaults fall off their CRA files from the default date. What has been suggested about files in arrears will show for 6 years after the accounts are closed but only if they were never defaulted. Hope that make it clearer to the OP

Thank you I was getting really confused because I'd read different things on different sites. Blimey this whole default thing is confusing.

But now read the last post and this seems to contradict this also? Aghhhh so confused! So lastly just to clarify (again!) I think this bit is correct: As the accounts were all defaulted in 2007 or 2008 the defaults will come off 6 years from that date?

The bit I'm still confused on is; Does this mean the whole account entry is removed at this time (effectively removing any trace of the account on the credit report (I know I'd have to declare a default if asked)) or does the account still show (as they were only satisfied in Jan this year) with 6 years worth of payment history with just the term 'default' removed?

Thanks if anyone can clarify (I must sound really dense but I keep getting different answers and I'm really confused!)

Dave_Ham

Experian, Equifax and Call Credit all treat them slightly differently and it still does seem to be an exact science.

It will depend on whether the account was sold on to a third party agency, was it defaulted originally and if the AP was arranged directly or through a DMP.

I personally do not believe that at 6 years default marker the whole account is removed from all of the credit files.

Bargie

so if it is the case that the default stays on for 6 years and then the account shows a DMP or arrears for a further 6 years from when it was satisfied, in that case it would actually make more financial sense to declare yourself bankrupt and have a completely clear credit file in 6 years rather than paying off the debts in full and being punished for at least 12 years? The financial system is crazy!

fermi

No, if the account has been recorded with a default, then the default and ALL details of the account will be removed from your credit files 6 years from the recorded default date.

That is EVERYTHING removed. The default, payment history/ status codes, DMP markers, settlement marker etc. Literally everything. No trace of the account should remain on the credit report.

Dave_Ham

I have seen many clients where this is not the case. In your opinion Fermi, should CRA then remove everything upon contact.

Additionally what about when debt sold on to a 3rd party?


Cheers

fermi

Any markers associated with that account should be removed. Obviously if there are other accounts still on the file then ones associated with those will remain.

Selling the debt/account on should not effect when defaults etc are removed.

http://www.ico.gov.uk/%7E/media/documents/library/Data_Protection/Practical_application/DEFAULT_TGN_VERSION_V3%20DOC.ashx

The ‘sale’ or assignment of debts on defaulted accounts

52 When the rights to a debt are sold to a third party, the lender has to make sure the records with the credit reference agency are accurate, up to date and adequate. If they want information about the debts to continue on the credit reference file they will need to come to an agreement with the purchaser about who is to be responsible for this.

53 If the purchaser agrees to take control of the record, the customer should be informed that the debt has been sold or assigned and to whom. The credit reference agency file should be changed to show the name of the purchaser and that the rights to the debt have been sold or assigned. The purchaser should then make sure the record is kept up to date including changes to the amount still owed. The purchase should not affect how long the record is kept. It should be removed six years after the default.

54 Where the purchaser of the debt does not agree to take control of the record, the original lender, and at least in part the credit reference agency, will remain responsible if the original record is kept on the file. When the debt is sold or assigned, the customer will no longer owe any money to the original lender. If the record is not removed, the sale or assignment should be recorded and the balance should be shown as zero. The customer should still be told who the debt has been sold or assigned to.

fermi

Also remember that the above applies to accounts where an actual default has been registered with the CRAs.

In many cases for "Arrangements to Pay", DMPs etc, where payments are rescheduled, or represent a substantial fraction of the original contractual payment, then the account may not meet the definition/indicators of a "default" (as per ICO guidelines). So even in a DMP etc, a formal default on the CRAs may not be recorded during it's term.

(You and I may say the customer has defaulted simply as they are not meeting contractual terms, but the criteria for recording a default on the CRAs has significantly more slack in it than that.)

If a default is NOT formally recorded during the AP/DMP etc, then yes, account info would remain for 6 years from the settlement date.

Bargie

Thanks Fermi for clearing it up. I was definitely defaulted so hopefully next year should have a clear credit file. And thank you to everyone else too who tried to help answer my question. Appreciate all the responses.

in light of that Dave, do you think it best to wait a year (will it make a huge difference to mortgage and rate etc being 5 years old?)

Dave_Ham

Your call; rates now are likely to be 4.5%-5%, possibly lower in a year but a year is a long time at the moment

Bargie

Thanks - got to sell the house first too, in current market that could take a year I guess!!