CRAs View on Arrangements to Pay

cakeforbrains

Do you have an historical Arrangements to Pay (APs) in your financial history, and if so how does your credit file reflect them?

Nearly two years ago my OHs bank recalled his overdraft. We couldn't afford £900 a once so he called the bank and they agreed to reduce the overdraft steadily over four months. We (over)paid this and presumed that everyone was happy.

Fast forward to a couple of weeks ago and, after casually mentioning the AP on the mortgage board, I was informed that this would look really bad for a mortgage application. As bad, even, as a default.

My question is, why don't Experian or Equifax mention this?

I know that their scores are arrived at using different algorithms, and that lenders use their own computations to decide whether they will lend but I think even Martin Lewis advises they provide a very broad guide. And, even setting aside that fact that my OHs score was showing as 999 the APs themselves were marked in a way that a person would presume it was neutral information.

Equifax presented it as little grey circles with AP in them - not red or orange, which they seem to use for other adverse information. And Experian simply add two lines at the top saying 'arrangement start' and 'arrangement end'. Neither CRA explains that the AP might be a bad thing in the same manner that they flag up, say, not being on the electoral roll, or using a lot of available credit. How can they be allowed to get away with that.

As the arrangement was only short and we weren't informed of the effect it would have on his file, my OH managed to get the bank to ask the CRAs to remove the information. On the day the APs disappeared his 'score' shot up to 'excellent' with Equifax (so at least the information was reflected in their algorithim) but, as I say, Experian already declared him as 999 so there was no accounting for it there.

As I say, I am aware that the scores themselves should be taken with a pinch of salt, but how can the CRAs be allowed to get away without explaining that having an AP is bad? We honestly didn't know and, without me trawling these boards, I suspect that we'd have gone ahead and been rejected for a mortgage.

[Deleted User]

Use a broker for your morgage app. He should have a good idea of which lenders may view APs the least negatively.

They're obviously not good, as it should you didn't keep to the agreement, but it's arguably better than having defaulted entirely and skipped the country.

cakeforbrains

Deleted_User wrote: »

Use a broker for your morgage app. He should have a good idea of which lenders may view APs the least negatively.

They're obviously not good, as it should you didn't keep to the agreement, but it's arguably better than having defaulted entirely and skipped the country.

Thank you. Yes, we are using a broker, but the AP markers are gone now as if they hadn't existed, so presumably it's not going to present a problem with the mortgage.

I'm just annoyed that the CRAs don't even point out that APs are bad. They present them as neutral.

Thrugelmir

cakeforbrains wrote: »

I'm just annoyed that the CRAs don't even point out that APs are bad. They present them as neutral.

CRA's don't lend money. They simply collect and process data. What's viewed as bad is a matter for the lender concerned.

cakeforbrains

Thrugelmir wrote: »

CRA's don't lend money. They simply collect and process data. What's viewed as bad is a matter for the lender concerned.

Yes, you make a good point. And I know that lenders put more or less weight on different things.

That said, CRAs are happy to describe information as 'negative' or 'positive'. That's the crux of their business model (with the individual). So how can they be allowed to describe APs as 'neutral'?

GingerBob_3

cakeforbrains wrote: »

Yes, you make a good point. And I know that lenders put more or less weight on different things.

That said, CRAs are happy to describe information as 'negative' or 'positive'. That's the crux of their business model (with the individual). So how can they be allowed to describe APs as 'neutral'?

They are not regulated.