Credit rating mess loan arrears, confused!

Crispycentred

Hello all

New to this site, and so happy to read all of the amazing advice here.

My problem is that I have an unsecured loan of around £15K which I took out in 2009 over 7 years (my monthly payment is £287 per month)...

A year and a half ago, I was unemployed for 4 months and couldn't make my repayments so I got advice from the consumer credit council and came to a written agreement with my creditor to pay them £1 per month till I got a job - which I did do once I was workin again. For the last 18 months Ive been paying again £287 per month..

I got a copy of my credit report and it shows me defaulting for those 4 months (4 red boxes) and then no record at all after that point until now showing that I started making payments again... I called my creditor and they said I need to bring my account out of arrears (approx £1,500) which I'm never going to have spare...

Am I right to dispute this? It doesn't seem really fair in that I have been making payments at the originally arranged amount of £287 for 18 months now and this record of good behaviour is not shown on my report. I was also wondering being that I came to a written agreement with the loan company to pay £1 a month whilst I was unemployed that I have a case to have the default removed completely?

thank you!

fermi

The creditor agreeing to £1 per month payments, even in writing, is not the same as a formal rescheduling of the agreement. As such, your credit report should reflect the fact that you did not meet the contractual payments under the original terms.

It's not clear from your description whether the loan has actually been recorded as a default?

If it has, then the last status would be a D or 8, and any payments after that would only show up as a gradually reducing balance. Once defaulted it stays that way. No matter what you later pay.

If it is just showing as x months late payments rather than a default, then it should one of numbers 1-6 as the monthly status. You can bring that up to date again by paying off the arrears. What do the latest ones say?

Crispycentred

Thanks for speedy response :j

Just had a look at my credit report.. It has numbers in the boxes (upto 4) and then the last month is a 'D' unfortunately. The 'D' is in Dec 2011, but from Jan 2012 up until now I have been making payments at the original amount of £287 a month again but this isn't showing on my credit report at all - after Dec 2011 the boxes end - I wasn't sure whether this was right or not - or if I could do anything about it?

fermi

That's the thing. Once an account has been defaulted the monthly status codes no longer have any meaning, as they only apply to non defaulted accounts.

On some credit reference agencies you just see nothing recorded afterwards like yours. On others they show this as a string of continuing D/8 until the account is finally settled in full.

But in neither case will you normally ever go back to the normal paid up status, even if you clear the arrears.

In fact, given the recorded default it's a little surprising that you haven't been chased for the full loan amount, let alone just the arrears.

Did they ever send you a formal default notice under s87 of the Consumer credit Act giving you 14 days to bring the arrears up to date?

Crispycentred

No they never sent me a formal default notice, although they send me letters approx every 6 months to tell me that the account is in arrears. The loan provider passed the debt collection (not the debt itself) to a solicitors with whom I arranged to make the original payment of £287 per month again. From what you're telling me, even if I could afford to bring the account out of arrears, it wouldn't make any difference to my credit rating?

Would that mean that I would have a recorded default on my credit file all the way to the end of the loan? rather than just being dated from the actual date it happened?

fermi

Only thing that would make a difference now is paying the whole loan off in full. Even that may not be a big difference.

A default stays on your report for 6 years from the initial default date. Then all details of the account and default are removed.