Cancelled loan on my credit report

bex_mar

I applied for a £20000 loan with Tesco bank, was accepted and I digitally signed the agreement. Within a couple of hours, I changed my mind and so called Tesco and cancelled it. They said the money was already in the process of being transferred into my bank account, so to ring and pay it back once it was in there, which I did.
But now, they have reported to the credit reference agencies that I have an outstanding debt of £20000 with them. This has made my 'score' drop a significant amount. I rung them and they said they have now reported that the account is 'closed and settled' but will take up to 3 months to show this on the report.

However, I didn't think anything should have been reported to the credit reference agencies, as I withdrew from the contract within the cooling off period and so no contract existed? Tesco said that the account wouldn't be removed, it would stay on there but as 'closed'.

Is this correct? or should it be removed?

Thanks for your help

Ebe_Scrooge

This is correct - effectively they lent you the money, and you paid it back - albeit in a shorter period of time than originally anticipated.

There's nothing to worry about - if anything, the presence of a fully settled account will do a little bit to improve your credit history.

I'd be more worried about the drop in your score - at least, I would if it made the slightest bit of difference to your ability to get credit in the future. Thankfully it's as much use as a tea receptacle constructed from cocoa solids, so give it the attention it deserves - i.e. precisely none whatsoever.

DCFC79

The entry should stay as it reflects what happened.

bex_mar

Thanks for the replies. They are contradicting what I understand from reading online, checkmyfile.com says it should not be reported or negatively affect your ‘credit worthiness’. If you’re correct then I accept that. I was refused a new mobile phone contract on Saturday, after they performed a credit search, and said they would only issue a new contract if it was under £50 a month. So I checked my report and that’s how I discovered this entry. It’s showing as a £20000 debt. We cancelled it within 3 hours, so they reported it to the credit agencies within that time? Or would they have still reported it even after we had cancelled it?

foxy-stoat

Makes you wonder what you were going to spend the £20,000 cash on....then within hours of receiving the money you decided you didn't need it after all and paid it back.

Anywho - I bought a table with my barclay card and logged onto credit karma and there was an alert there for a balance increase after a day or 2.

bex_mar

Oh we definitely still needed it! House extensions don’t pay for themselves �� I have generous parents who gifted the money instead, as an early inheritance. Fortunately, the 14 day cooling off period allowed me to cancel. I just didn’t realise it would still appear as an entry even after cancelling within a few hours.
Hopefully, once it’s updated as repaid and closed, the impact will be more positive.
Thanks for the replies

molerat

OP is correct in their assertion that nothing should be reported apart from a credit check. CCA 1974 states ....

(7)Subject as follows, where the debtor withdraws from a regulated consumer credit agreement under this section—

(a)the agreement shall be treated as if it had never been entered into, and

(b)where an ancillary service relating to the agreement is or is to be provided by the creditor, or by a third party on the basis of an agreement between the third party and the creditor, the ancillary service contract shall be treated as if it had never been entered into.

so there is nothing to report to the CRAs, raise a formal complaint with the lender.

bex_mar

molerat wrote: »

OP is correct in their assertion that nothing should be reported apart from a credit check. CCA 1974 states .... so there is nothing to report to the CRAs, raise a formal complaint with the lender.

This was my understanding too. Thank you for this. I did speak to the lender and they said it wouldn’t be removed, just marked as closed. I will raise a formal complaint.
Many thanks

Ben8282

It didn't take them 3 months to report the original loan so it is unlikely to take 3 months to report the payment. They will report the new status of the loan when they next update.
Most people don't usually apply for loans then change their minds 3 hours later.

bex_mar

Ben8282 wrote: »

It didn't take them 3 months to report the original loan so it is unlikely to take 3 months to report the payment. They will report the new status of the loan when they next update.
Most people don't usually apply for loans then change their minds 3 hours later.

No, most people don’t. I’m very fortunate and thankful to my parents that they could give it to me instead.
It also seems that I was in fact correct and no loan account should be reported to the CRA’s, going by the wording of the CCA 1974.
Thank you to Molerat for the helpful comment ����

T-G-C

bex_mar wrote: »

Thanks for the replies. They are contradicting what I understand from reading online, checkmyfile.com says it should not be reported or negatively affect your ‘credit worthiness’. If you’re correct then I accept that. I was refused a new mobile phone contract on Saturday, after they performed a credit search, and said they would only issue a new contract if it was under £50 a month. So I checked my report and that’s how I discovered this entry. It’s showing as a £20000 debt. We cancelled it within 3 hours, so they reported it to the credit agencies within that time? Or would they have still reported it even after we had cancelled it?

They would have reported it after the cancellation, as the loan account would still be on the system showing as closed, thereby instructing the automated system to report it as closed.

There is also a modern system in place where creditors can report account records in real-time however I do not believe Tesco Bank are a part of this. It is primarily for subprime lenders to prevent spirals of short-term loan accounts being opened, however the technology is being expanded in the future to make credit filing more streamlined and accurate, since updates can currently take around 30-60 days to show, thereby not giving lenders a completely accurate picture of their applicant. Accounts under this new live system would show as "MODA".