Partially Settled Debts and Your Credit Rating

jasonwatkins

I'm looking to tackle the seventh layer of hell that resembles my credit file and i've had an offer from Lowells on two long term debts that i've had with them.   If I pay one in full, they'll take a greatly reduced payment on the second to close both accounts.
They said that one will be marked as "partially settled" but, since both were in default, they'll sit on my credit file for six years.
Will it make any difference to my credit rating if a partially settled debt sits on the credit file ?
I'm fully aware, and accepting of the fact, that my credit rating isn't really ever going to improve any time soon, but i'd like to know if it might at least creep up a little.  Thanks.

[Deleted User]

Once you've defaulted, a settlement makes little difference. The accounts will drop off 6 years from default.

Don't use your credit rating as a measure of how lenders view you.

jasonwatkins

Thanks. I’m not looking to borrow any money or get any more credit, I’m just looking to settle any and all outstanding debts that I have and wondered if this would mean anything for my credit rating overall.
It’s been in the toilet for years so any minor improvements would certainly be welcome.

jasonwatkins

Deleted_User said:

Once you've defaulted, a settlement makes little difference. The accounts will drop off 6 years from default.

Don't use your credit rating as a measure of how lenders view you.

Hey, sorry to bring this back up again but it's just made me wonder.   As far as I'd planned, I was going to pay off these two long term debts on monday to the tune of around £400 pounds.   At the risk of asking a stupid question that i probably already know the answer to, since you've clearly already told me, am I effectively throwing £400 into the bin if the accounts are in default ?

One was updated in October 2019, the other in January this year so would this mean that if I didn't pay anything towards them then they would simply drop off my credit file and be written off in 2025/2026 respectively ?

[Deleted User]

They will drop off your credit file 6 years from default, but not be written off.

They might choose to go for a CCJ if not statute barred, which would then appear on your files for a further 6 years.

jasonwatkins

Aha, ok. Thanks for clearing that up.

They haven’t taken any form of recovery action against me for years - no letters, no phone calls or anything so that’s what made me wonder.

onlyfoolsandparking

Personally I would just let them 'drop off' your file, the damage has already been done, no point paying any more money. regarding the CCJ, they could indeed apply for one within the 6 year period from default but after 6 years they are usually dead and buried but after 6 years they would have to apply via a Judge to enforce the debt and that is rarer than hens teeth! 

jasonwatkins

onlyfoolsandparking said:

Personally I would just let them 'drop off' your file, the damage has already been done, no point paying any more money. regarding the CCJ, they could indeed apply for one within the 6 year period from default but after 6 years they are usually dead and buried but after 6 years they would have to apply via a Judge to enforce the debt and that is rarer than hens teeth! 

This is what's niggling at me at the moment really.   On one level, I'd like to think that i've paid all of my debts and I don't owe anybody any money, but on another level there's the thought that I'll be paying money I don't necessarily have to pay because, as you've quite rightly said, the damage has been done.

Even though my credit rating apparently went up by 18 points last month, it's still only 178 and has been around that level for the past nearly 10 years.  I'm been out of work for a long time due to long term medical problems and I'm on Universal Credit at the moment so I would have thought that even if a CCJ was somehow awarded, there wouldn't really be any kind of way to recover the money anyway as I don't have any savings or any assets.

Also, the fact that Lowells haven't pursued these debts in any way for probably 2 or 3 years now also makes me wonder if they'll even do that going forward.  

[Deleted User]

Just trying to understand the timeline - 2025/26 probably isn't the time they're due to drop off. The updated date is the last time they provided/updated info to the credit agencies.

As you say it's long term, when's the actual default date? E.g. If it defaulted in 2014, it comes off this year.... paid or not.

If they are recent defaults, then 6 years is a very long time to essentailly play chicken and hope you don't get a CCJ. If you move house etc. you could easily end up with a CCJ you don't know about.

If they're dropping off say this year or next year, then by all means chance it and see what happens. Any longer and you have to consider the emotional/mental impact of knowing these debts are still around and could, in theory, be turned into CCJs at any moment. There should be a way to back out of CCJs (e.g. pay it all at the last minute), but it's probably not as cheap as if you can come up with a full and final settlement now.

Edit: And if you've moved house during the time since you got the defaults.... Lowell etc. aren't exactly known for playing fair. It's easy to work out what your current address is but I've heard multiple stories of them just sending court paperwork to an old address! They don't legally have to chase you/ensure they get the right house.

jasonwatkins

Somerset_La_La_La said:

Just trying to understand the timeline - 2025/26 probably isn't the time they're due to drop off. The updated date is the last time they provided/updated info to the credit agencies.

As you say it's long term, when's the actual default date? E.g. If it defaulted in 2014, it comes off this year.... paid or not.

If they are recent defaults, then 6 years is a very long time to essentailly play chicken and hope you don't get a CCJ. If you move house etc. you could easily end up with a CCJ you don't know about.

If they're dropping off say this year or next year, then by all means chance it and see what happens. Any longer and you have to consider the emotional/mental impact of knowing these debts are still around and could, in theory, be turned into CCJs at any moment. There should be a way to back out of CCJs (e.g. pay it all at the last minute), but it's probably not as cheap as if you can come up with a full and final settlement now.

Edit: And if you've moved house during the time since you got the defaults.... Lowell etc. aren't exactly known for playing fair. It's easy to work out what your current address is but I've heard multiple stories of them just sending court paperwork to an old address! They don't legally have to chase you/ensure they get the right house.

I've got one debt that's due to drop off this year.   It was last updated in July 2014 so that'll drop off in a few months, but it's nothing to do with the Lowell debts.

The first Lowell debt was opened in 2015 and was last updated in October 2019.   There doesn't seem to be any information on the Clear Score website when it actually went in to default though, although I imagine if it hasn't been updated in nearly 6 months then maybe October last year is the default date, especially since the second Lowell debt was taken out in 2017 and was updated on the 20th of January this year.

As far as the long term emotional impact of these debts, there isn't any.   I've been aware that they've been there for years now and it doesn't play on my mind at all because I know I just don't have the money or the assets that anyone could seize to address them.   The only real asset I have is my PC but that's almost 10 years old and is probably worth no more than £50-£100 pounds.

[Deleted User]

Have you been on the Equifax website? Get the stautory report (free instant report, not the 30 day free trial etc.) - sometimes these third party websites (e.g. clearscore, MSE credit file, TescoBank 'credit view) aren't as clear as they should be.

I've just logged in to clearscore and looked at my old defaulted accounts to see what you're seeing, and I can see where the confusion is - it only shows updated/opened/frequency. That's incredibly misleading. I'm guessing whoever designed clearscore's new layout didn't think about defaults!

Go to Equifax and check the actual default date. As an example, Equifax will show: Default date, opened date and updated date. Default date is key. 6 years from default date it drops. Regardless of whatever the last updated date is.