Help clearing a "partially settled" account

darrenj1

Hi, I currently have on my account, a partially settled account from Natwest.

I have been clearing up my credit file over the past year to build up a credit rating for a mortgage.

I finished an IVA 2 years ago and since then started to save, opened a low value credit card which I repay every month, I also have a mobile contract which is kept up to date.

When I applied for a bank account with £100 cashback, I was refused, so I got my credit file from Equifax and Experian.

After looking at the credit file I was shocked to find 3 defaults on the account, 1 from virgin media about 3 years ago, which I ended as I moved and they could not supply service at my new address, so I disputed this and it as all been set to 0 on my credit file.

The second one was from Orange which ended just over 1 year ago as they failed to get the new Broadband install to work properly, and they agreed to cancel the contract. Again, the default was entirely incorrect and they now realised this after my dispute with them. They have set my credit file to 0 too.

This leaves a remaining default with Natwest for £375, however this one is a geniune default. I was still refused a mortgage, and my broker is looking into why this could be, he has advised me that although it is marked as settled in one field, it is also marked as partially settled in the notes section. I did not notice this initially.

My issue is with the partially settled field, and how this was added without my knowledge, when I paid the "full and final settlement" I was not told about the marks it would leave on my credit file, and I feel that this may be against the rules, but I am not sure.

Are there any tactis to get this updated to full settlement or removed entirely based on the fact I was not told the impact at the time or by negotiating in any way?

I was in an IVA at the time of the default and this was all fully settled it is no longer on my credit file as it started over 6 years ago.

fermi

A partial settlement flag on the entry is correct when the account was either part of a full and final settlement where you settled in for less that the full amount (hence partial), or when the debt was included in an IVA where again they had to accept less than the full amount.

http://www.scoronline.co.uk/files/scor/high_level_prinicples_document_final.pdf

5. When an account is closed, the record should properly reflect the closing payment status of the account and any agreement between the parties

If you make a full or part payment and no further money is expected, the account should be closed unless you have agreed with your provider to continue your relationship.

If the account is to be closed, your record should be marked as fully paid if:

• You have paid the money owed in full
• A CCJ or decree was granted and you have paid in full the money owed as determined by the court

Your record should be closed and marked as partially settled if:

• The lender accepts final settlement of the account for less than the balance outstanding
• Your account is included in an insolvency such as a bankruptcy or IVA which is discharged / completed and less than the full amount is paid

The fact that the account was previously in default will remain on your credit file for 6 years from the date of default. If the account was not in default, the record would remain on your credit file for 6 years from the date of closure.

darrenj1

Ok so they have followed the rules with the correct way to mark the file, however is there a requirement to notify my when they accept my offer? If they just told me over the phone that a full and final settlement would clear the account, shouldn't they notify me about the impact on my credit file?

Do you have any experience of repaying the remainder and having it changed to settled?

National_Debtline

Hi Darren, I thought you might find this information we've had from Experian around partial settlements useful:

They don't currently believe such flags are usually used in credit scoring, but they could well be included in a lender’s underwriting policy rules. This could mean that the appearance of a flag on a report would trigger a manual review of the application, where the additional information could then be considered by one of the lender’s underwriting experts.

As you can see, it may not have as drastic effect on your credit score !!! you might initially think.

Really hope that this helps.

Best wishes,

David.

darrenj1

National_Debtline wrote: »

Hi Darren, I thought you might find this information we've had from Experian around partial settlements useful:

They don't currently believe such flags are usually used in credit scoring, but they could well be included in a lender’s underwriting policy rules. This could mean that the appearance of a flag on a report would trigger a manual review of the application, where the additional information could then be considered by one of the lender’s underwriting experts.

As you can see, it may not have as drastic effect on your credit score !!! you might initially think.

...

Yes, thank you for that explanation, and while it may help with some credit, it has resulted in Woolwich bank and Abbey for rejecting a mortgage, as you say, based on underwriting policy of not accepting any mortgage showing as a partial payment.

I have a case logged with Natwest and there may be a way to get it finally set to fully paid, if I do make the full payment, however I was cut off mid call as my mobile is %&$%&.

Thrugelmir

darrenj1 wrote: »

Yes, thank you for that explanation, and while it may help with some credit, it has resulted in Woolwich bank and Abbey for rejecting a mortgage, as you say, based on underwriting policy of not accepting any mortgage showing as a partial payment.

In general terms lenders aren't interested in transacting business with people that don't repay their debts. Why would they?

You can't have you cake and eat it as the saying goes.

darrenj1

Wow! I have just got off the phone to Natwest and advised them that I was told about a full and final settlement but not explained about the credit file. This happened 3 years ago and they dont call it full and final settlement any more, it is called "discounted payment"

Short story - They are changing my credit file to fully settled, refunding call costs from mobile, and paying 1 month each on both my experian and equifax reports. £50+ back within 7 days promised.

fermi

darrenj1 wrote: »

I have a case logged with Natwest and there may be a way to get it finally set to fully paid, if I do make the full payment, however I was cut off mid call as my mobile is %&$%&.

If they told you it would be marked as settled then you may have a case. If no luck, take it to the ombudsman.

fermi

darrenj1 wrote: »

Wow! I have just got off the phone to Natwest and advised them that I was told about a full and final settlement but not explained about the credit file. This happened 3 years ago and they dont call it full and final settlement any more, it is called "discounted payment"

Short story - They are changing my credit file to fully settled, refunding call costs from mobile, and paying 1 month each on both my experian and equifax reports. £50+ back within 7 days promised.

You must have been typing while I was.

Very good. Pleased for you. Hold them to it.