DEFAULT registered by accident!

draconian_2

Hello All

Last month I cleared a load of debts from my marriage and one of them was a f&f settlement of a £4193 debt with First Direct for just £4000.
Just before paying all these off I had a clean credit file because these debts were older then 8 years old.

I applied for a loan and was denied - so I checked the file and against my equifax and callcredit file was adefault for £193 by First Direct.

I called and remained quite calm - explained my position and that this black mark was going to lose me house purchase and that my partner was livid because she thought I was lying about my ability to get a joint mortgage.
The lady said they had made a mistake and I should have had a "partially settled" register on my credit file.

Does anyone know what I should do about this - clearly they have screwed up - and now they have put me in a very difficult position.

They are looking into this - would the "partial settlement" registered on my credit file cause me problems - only I am happier to cough up the £193 to clear this up!

Thanks

D

fermi

You say you had a "clean credit file"?

Did you have a previous default registered for this account? If so, when did you default and when was it registered?

A default should only stay on your credit reference file for 6 years from the original default date. If they have re-registered a default that has already disappeared, then they should not have done so.

If there is an existing default on your file that isn't less than 6 years old, then they could mark that as "partially settled".

What they shouldn't do is re-register a default that has already disappeared or register a new one. The fact that you have settled the account does not allow them to do this.

draconian_2

Hello.

The debt was never registered as a default because I always paid FD directly and they never decided to register it. I was told 5 years ago that should I stop paying them then they would sell the debt or refer it and at that point it would be marked against my file.

Once a record becomes 6 years old it comes off your credit file and so the defaults I once had were all gone as you indicate.

Therefore as this was never registered by the bank I think they were allowed to register.

The lady I spoke to said she would definately come back to me today about this. My issue is that FD have marked my report now - I assume they can remove the information as they put it there? If they remove it - the report shows "worst status" - it was never defaulted I suppose so "arrangement to pay" could be marked but that is still bad in my opinion - am I screwed?

Thanks

D

GeorgeUK

If the debt is partially settled then there is still an amount outstanding. I would write to them so that there is a paper trail, explaining what you said over the phone and that you can pay the outstanding amount in full on agreement on agreement that the default will be removed.

If you didn't receive the original default notice, i would also mention that.

It may be that they will not remove the default, but only mark it as settled when they receive payment, but it is worth a try.

fermi

I agree. The option that may result in least argument is if you offer to pay what is outstanding on the condition that the default is completely removed.

But if they won't do that then you need to tell them to remove it on the grounds that they have taken an excessive and unfair length of time to register it. The Information Commissioner considers it only fair to wait a maximum of 6 months to do this in normal circumstances.

If necessary you could make a complaint to the ICO is they refused to remove it on those grounds.

From: Technical Guidance Note - Filing defaults with credit reference agencies

Time framework

Although there will be some flexibility in the definition of a breakdown, we believe there should be general rules for the minimum period of arrears which should exist before a default can be filed. Equally there should be a maximum period after which, if anything is to be recorded with a credit reference agency, a default must be filed. The following are in line with the practices currently adopted by most lenders.

• Accounts should not be routinely filed as being in default where full payments or those due under a rescheduled agreement are fewer than three consecutive months in arrears.
• Accounts should normally be filed as being in default where those payments due have not been received for six months.

This time framework only relates to filing defaults. It does not affect the lenders’ ability to continue to report accurately on the extent of arrears using monthly status codes. We recognise that may not always be appropriate for products which advance credit over either a very short or very long-term.

draconian_2

Hi Fermi

Really useful data there!

I have now heard back from FD and they listened to my original call in to the lending department when I settled the debt. As she said I was not warned or explined to how the closing of my file would be - essentially I should not have had a default but a "partially settled".
I did also ask her to find out how they would view someone with this data on their file - she said it would not be viewed at all well.

As a result of their mistake and lack of explanation they are having the entire entry removed from my credit file, so there wont be any entry at all which I figured was reasonable - and she said she would have a letter sent out explaining a mistake had been made in ever registering a defualt - so I can prove that it was not my doing!
Alongside that I did not have to pay the £193 either.

I would say they have made a big mistake but it was dealt with in a satisfactory way.

Thanks for your help guys!

Cheers

D