How can I get a mishandled utility bill default removed from my Experian credit file?

buyer93

Hello,

I've just applied for a mortgage and, to my surprise, been declined on the basis of a bad Experian credit file!

Some digging led me to the source of the problem, which, to my surprise is a defaulted account for water bills at an old address, with a balance of about £300.

Obviously I'll struggle to get a mortgage accepted unless I can get this removed—it's about a year old, and waiting five more years until it drops off isn't really an option for me.

I've got otherwise good credit — no loans, plenty of savings, on the electoral roll, etc.

I've spent some time on the phone with the water company, and found that they've passed the balance onto a debt collection agency, which they've told me to get in touch with instead.

I feel like my strategy relies on a few different things, from most obvious to riskiest:

Default added too late

It looks like the default was added about eight months after the first missed payment. My understanding is that it should be added between 3-6 months. This doesn't seem like a big difference, but this change would put it over a year ago (it's currently 11 months), which may make a difference to some lenders, who ask for 12 months of clean credit history?

I wasn't aware of any money owed

The original water company had my up to date email address and phone number. I can prove this because I have email receipts from them dated before the missed payments.

Nonetheless, they claimed not to hold these when I spoke to them on the phone. I think my position is: it isn't my problem whether your systems talk to each other properly—from my perspective, you do hold them and I can prove it.

Given this, the fact that I didn't get any warning about the default is mismanagement on their part. My understanding is that they should pull out all the stops to contact me, and they didn't do that.

I've since gone to pay more money using the water company's online payments service, and been told the account is "paid in full". I'm actually unable to pay, even if I try. This leads onto the next question...

Some kind of data error—my credit file contains the same account reported twice

My credit report shows two of the same account: same water company, address and covering the same time period.

One of them is showing as correctly settled, and one is showing as defaulted (the one causing the issue).

To me, this could be the root of the problem. When I went to pay, was I being charged against the settled account, leading to the "paid in full" message? How could they have mucked this up?

I don't believe any money is actually owed at all

I have written evidence from the water company where I live right now, taking responsibility for a data error that led to them incorrectly thinking I owed them money.  The time period of that error overlaps with the period of this default. Could these be related?

I'll happily pay the whole amount right now if it means we can remove the default

£300 is nothing compared to the cost of buying a house. I'll happily pay the whole amount here and now if it means we can get rid of the default. I believe I need it to be actually removed rather than just marked as "settled" in order to remove the impact on my credit score. What are the chances of them agreeing to that?

----

How does that sound? Is there a trick I'm missing?

How likely am I to be able to convince the debt collectors to remove the default, either by offering payment, convincing them they've made a mistake, or that the original water company mishandled it?

Do I have a case for the financial ombudsman?

What would you do in this situation?

[Deleted User]

This is quite long winded but a few points

Default date guidance is to default after 2-3 missed contractual payments, not 3-6 months but this is guidance only, you can ask them nicely if they will back date it but you cannot force them. Similarly, it is guidance to advise before defaulting but they absolutely do not have to pull out all the stops to contact you before doing so, they are entitled to do it as soon as the contract is broken.

The reason for 2 defaults is that the water company has sold the debt so your account is marked as closed (as they received some money from the debt collector) and the debt collector is now correctly marking the account with them in default. You will have to pay them.

It's way too late now for them to remove the default but 1 alone, marked as settled, should not prevent you getting a mortgage if you have a suitable deposit and good earnings

buyer93

Sure—that makes sense. It seems like the fact that I've tried to pay more and wasn't able to is crucial. Surely that puts it in the "system error" category?

[Deleted User]

You said you tried to pay after you noticed the default, not immediately when you got the bill (or didn't in this case) - but they may say they sent it and you just ignored it, it's difficult to predict.

You can complain to them formally and explain this apparent error of them owing you money or whatever and they will have to look at it and respond with whatever they have. Try and stick to short factual points e.g. when you paid your bill, when you told them you were moving, when you asked for a final bill etc. It's too late to just pay it though as they have already sold it on.

Ignore the gimmick credit score, no-one but you sees it, least of all lenders. A default is correct if you owe money and didn't pay on time. A settled default is better than an open one.