Hi - need advice re: clearing debt and credit rating

LFCfan1981

Hello all, I posted a good while ago - maybe about 18 months ago? - about historic debts. I finally plucked up the courage and checked my credit ratings with the three major companies, and was very pleasantly surprised, but a bit confused.

Forgive me in advance if this is already dealt with in stickies or is 'common knowledge' or whatever. I'm new to this.

Firstly, Experian's rating came out as 'excellent' but Equifax's as 'poor' and CallCredit as 'very poor' - how do you explain this massive discrepancy?! I put all my address data into Experian going back to 1993 (when I was 11!) so it's not like I've held back with the info.

With Equifax / CallCredit (via checkmyfile.com) I could see only four debts totalling around £1,300. To cut a long story short, I incurred credit starting around 2001, always paid the debts, and defaulted in 2009-10 when I lost my job. When I regained employment, I just put my head in the sand and ignored the letters and phone calls. My debt should be way more than that, it should be like £5k-£10k. So why is it so low?!

I feel like a complete idiot now for stressing about it so much and changing phone number etc to avoid creditors ... it's taken me like 5 years to pluck up the courage to check my credit rating!

For the last about 6 years or so, I've just had a basic account and been very careful with money. Maybe that explains the high score with Experian?

pmd123

Credit scores are completely irrelevant, pay them no mind, it's what is in your credit file that matters, and even then, that is only if you are trying to obtain additional credit.

The fact that all 3 agencies rate you so differently proves how meaningless the score is.

Debts will fall off your credit file after 6 years, longer if there is a default or CCJ, but as yours date as far back as 2001, some of them may have dropped off now. Doesn't mean they've gone, but it may be difficult for some of them to be legally enforced anymore.

In addition, not all companies report to all CRAs, so just because they do not show on one does not mean they are not there, may be that company simply doesn't report to Equifax.

cakeforbrains

I bet you feel like there is a massive weight lifted now that you have started to face it. Well done!

As PMD123 says, some of your debts could well have 'fallen off'.

Potential lenders don't actually see your credit score, they just see the information in the file/s and make decisions based on that. Each Credit Reference Agency comes up with a score for you based on their own personal algorithm, which is why they are so different. So, for instance, my husband's score is 'Excellent' with Experian, only just 'Good' with Equifax, and 'Poor' with Noddle, based on exactly the same data.

LFCfan1981

pmd123: how do I get hold of my credit file then? Do all lenders have hold of this 'credit file' or do they compile their own when deciding whether to grant credit? Or is the 'credit file' those list of debts that I was talking about? The ones that add up to £1,300?

Although some of my debts dated back to 2001 (student overdraft etc) I actually only began, I think, to default in 2009?

Cakeforbrains: (nice name, btw) yeah, it feels good, but there's still so much unexplained. I mean, those debts may have 'dropped off' but there's no way I've just 'struck it lucky' and got away with it, surely?! They may be unenforceable, but do they show up on my 'credit file' (which, as you may be able to tell, I don't quite understand yet)?

I need to know a lot more information before I can move forward, I think. I was discussing this last night and thinking, if I just wait until next Spring, those other debts, won't they just 'disappear' too? As it'll have been 6 years since the first default. And it's not like they're sending me letters or calling me.

Or should I call them, sort something out, and pay them back? Would that be the best option?

sourcrates

Ok,
There are three credit ref agency's, noddle, experian, and equifax.

Lenders could use one, two, all three, or none, of the above.
What you see on your credit file is the information supplied to the CRA's by the lenders, if you default on an account, then it will show on your file for 6 years, weather it's paid or not, after which it will fall off.
The debt does not disappear, but if you haven't paid or acknowledged it in writing, for any period of six years, it will be statute barred, which means a creditor can't obtain judgement against you in court.

You need to check your file on all three CRA's, noddle is free, the other two can supply you a statutory copy for £2,available off there relevant websites.

Tixy

Any potential lender considering lending to you will search 1, 2 or all 3 of the credit reference agencies and will seem the same information you can see when you check those 3 agency files (they don't see scores and they don't see the names of your creditors but they see the same credit account information).

There is no central list of all debts a person owes.

You can't get a definitive list of your creditors by looking at your credit reports.

Debts drop off your credit file 6 years after the default date the creditors enter. So if you defaulted on some of your debts in early 2009 then they may well have fallen off your credit file. That doesn't mean that the debts are not still owed.

If this is the first time you have obtained your credit files then you may find that you have debt collectors that will start to chase you, because they will now know your current address.

If you do get creditors chasing you then the best first response is to send them a prove it letter, asking them to provide proof that you owe the money and proof that they have a right to collect it (template letter - Letter when you know nothing about about the debt - AKA "Prove it" letter)

If some do start chasing it is possible that some of your debts may be statute barred, and you may not need to pay. Info on statute barred debts here - Statute barred debts and the Limitation Acts (law is different in Scotland so if you are in scotland make sure you read the sections on scotland not england/wales)

Pixie5740

Lenders can use one or more of the credit reference agencies when deciding to loan you money. They will also use other information not shown on your credit files such as income to determine affordability, purpose for the loan, etc to determine whether they want to lend to you or not.

Keep in mind that if you own a bank or building society money and it hasn't been repaid even once it no longer shows on your credit file the bank may still know about it. For example, say you borrowed £5k from NatWest in 2005 and defaulted in 2006, that would no longer show on your credit file but if you tried to borrow money from NatWest now they would still have it on their own files. It happened to a woman over on the Mortgages board quite recently. She had defaulted on a credit card years and years ago and then applied to the same lender for a mortgage. Even though that credit card was no longer on her credit file the lender knew and told her no.

LFCfan1981

Thanks for all the advice, fellers - very useful.

Sourcrates: - okay, I put all my information about previous addresses and name / DOB into all three credit agencies, and today Experian updated itself with another small £96 debt and a £1,750 CCJ from Oct 2009.

So that's about 3 grand in total that the credit agencies seem to have on me. I am sure there was more - my life went a bit to pot after I went from earning £30k to the dole in 2009. Obviously my overdraft, a coupla credit cards, utility bills, rent etc - I couldn't pay anything. But these are the only debts that seem to show up now.

I don't have any letters from way back then. It was all thrown away. Also don't have any old phone numbers, so I've given as much info as I have available and that's what the CRAs have come up with - so I suppose that's what any potential lenders would see?

Tixy: that's interesting. Even though these old debts drop off my file, they will still be logged with the respective lender?

So my best response atm is to send out 'prove it' letters to the lenders, and, if possible, get them 'statute barred'? Oh, I'm in England btw, so Scottish law won't apply.

So the other option: simply wait a few months until 6 years after the default, then they drop off my file, I *shouldn't* do that, no? It's best to contact them?

If I don't have the info (in terms of letters etc) and the three credit agencies don't have anything on them, then surely any older debts - well, I can't really *do* anything about them, can I? They're kind of lost in the ether unless I apply for credit and something comes up.

Tixy

I would only send prove it letters if creditors/debt collectors write to you chasing you for payment.

If you get a reply to a prove it letter then I'd consider each debt individually as to whether it is likely to be statute barred or not. If you think it is statute barred then I'd then write to the creditor to say that you think it is.

You are as likely to get letters chasing for older debts not on file as you are for the debts still on file.

Your rent wouldn't show on file unless the landlord obtained a CCJ. Council tax won't appear on file (although if you owed council tax they will almost certainly have a court order for it).
Utilities may not appear on file, not all utility companies used to get permission to report to the credit reference agencieds.

Regarding the CCJ - I would contact the court who issued it to get a copy of the judgement.

LFCfan1981

Right - so, it's kinda of a 'wait and see' scenario at the moment?

I am honestly not sure what the large CCJ might be. I think it might actually be an old landlord over unpaid utility bills which were all in her name. I mean, we left the property never having received any bills in our name, and then she contacted us a week later saying "why didn't you pay these bills?" I replied that we had received no letters in our name the whole time we were there, and then she said we should have contacted the water / electricity / gas people ourselves to put the bills in our name?

I mean, in any other place I've lived, that's not been the case - but she managed to get a CCJ against me (everything was in my name at the time, not my ex-gf)

When you say 'court order', you mean CCJ, yeah?

Tixy

The CCJ is the highest risk debt at the moment, as there is a risk of them trying to enforce the debt (sending bailiffs, getting a deduction from your wages etc). Thats why I'd get a copy of the judgement from the court.

With regards to the 'court order' and council tax, councils use a court liability order to take a debtor to court for council tax, it is not quite the same as a CCJ and doesn't appear on your credit file - but can still result in bailiffs being instructed (or other enforcement action).