PayDay Loan Company Added Account 6+ years after...

WorkingTowardsDebtFree · 29 December 2017 at 1:19PM

I'm hoping someone can offer some advice.

A PDL company has added an account to my Equifax credit file.

It was apparently taken out in April 2011, and this was a bad patch of my life although I genuinely don't recognise it.

Anyway, they have added it in December 2017, saying it was opened in April 2011 and settled in November 2017. There's no adverse payment history and it's showing a £100 original balance with a £0 current balance, and settled.

It's showing as short term credit, which I fear will harm mortgage applications shortly.

I have contacted them by phone and they have said that no payments were ever made and the last contact they had from me in writing was April 2011.

So by this means, if the account does exist then it should have been defaulted in October 2011, and statute barred in April 2017, and should not be reported after October 2017?

But doing what they've done, they've tainted my credit files with short term credit until 2023.

Isn't this a breach of ICO guidelines? They're trying to say that there wasn't regulation in the industry sector until 2015 and they're legally required to mark my account in this way since then (this doesn't add up).

From my perspective they're using this as a punishment method and future lenders will see this as me having short term credit until the end of 2017 (which I haven't).

Any advice would be very gratefully received!

Thanks in advance...

nic_c · 29 December 2017 at 1:55PM

Why until 2023? If it was defaulted in Nov 2017 then yes you would be right and have redress, but it looks like they have written the debt off, so its marked as settled. It could have been marked as defaulted six months after April 2011.

No breach but you can contact the CRA and inform them that its been over 6 years and needs removing. I would assume it will would have been moved to closed accounts and then removed off your report next month, but contact the CRA's to make sure if you like.

WorkingTowardsDebtFree · 29 December 2017 at 2:14PM

Thanks nic_c, I appreciate the response... But the CRAs won't remove it until the most recent update closing the account is 6 years old (or a default is 6 years old).

What they're saying is that the account has been marked as settled in Nov 2017 --- which means that the CRAs won't remove it until 6 years after this update, November 2023.

That means a Short Term Credit account appears on my account until November 2023, and that negatively impacts me more than a default would have, and for 6 years longer as Short Term Credit is viewed very negatively by a lot of lenders, especially in relation to mortgages.

Doesn't the ICO say that an account should have been defaulted once the lender knew that there was a breakdown of the relationship, between 3 and 6 months after non-payment.

This means that it looks like I've taken out short term credit (payday loans) with an active account up until November 2017 when this isn't the case. This will be a decline for quite some time for mortgages.

So what the lender is doing is using the payment history/markers as a way to extend reporting that is seen as negative for 12 years on customer's accounts, instead of defaulting them. I thought that this was against guidelines?

[Deleted User] · 29 December 2017 at 2:22PM

I don't see the issue here.

If it's showing as closed and settled with no late payments etc. then what are you worrying about?

Have you contacted the lender to enquire about it?

WorkingTowardsDebtFree · 29 December 2017 at 2:40PM

The issue is that a Short Term Credit account is viewed negatively by many lenders and stops things like mortgages being taken out.

Had they defaulted the account, or even chased for payment, all of this could have been dealt with years ago and it wouldn't be negatively impacting my credit file.

By them reporting the closing of an account when it becomes statute barred, a negative impact is given to me until 2023.

Had they defaulted the account in line with ICO and FOS guidelines (eg within 6 months of non-payment as it was clear the financial relationship had broken down) then a negative impact would have been given until 2017.

cjmillsnun · 29 December 2017 at 6:04PM

I have home credit on my account (viewed as badly as PDL) and had 6 defaults (all satisfied - 4 with PDL companies or their debt collectors). I still got a mortgage with a high street lender. It will have a negative impact for a couple of years and then you should be fine.

WorkingTowardsDebtFree · 29 December 2017 at 6:18PM

cjmillsnun wrote: »

I have home credit on my account (viewed as badly as PDL) and had 6 defaults (all satisfied - 4 with PDL companies or their debt collectors). I still got a mortgage with a high street lender. It will have a negative impact for a couple of years and then you should be fine.

But this is my point - this is a historic account that's just been added no. No chasing, no reporting, no default - until it becomes statute barred.

I wasn't aware of it and I've had no chance to resolve it. They haven't played by the ICO/FOS guidelines and this extends the negative impact on my credit worthiness beyond the 6 years of what the default would have.

I've worked hard at clearing all my other issues and debts up and then keeping a clean nose for almost 6 years. In a few months, my credit file would have been absolutely perfect. I sought out and chased down and paid off everything from a bad period of my life.

Now, all of a sudden, this is added and is another negative mark on my credit files for the next 6 years.

It will impair me getting a mortgage for the next few years (we've been saving a deposit to get a mortgage in a few months from now). And then it will impact me getting good rates beyond that.

Had they reported the account and defaulted it as they are supposed to, I would have known about it and be able to deal with it --- and also it would have not had an impact beyond the 6 years of the default.

sourcrates · 30 December 2017 at 12:15AM

It can be swings and roundabouts, some lenders view payday loans negatively, others more positively.

The key issue is that it says settled, with no balance owing.

It may not be as bad as you perceive it to be.

Info here :

https://www.cashlady.com/blog/payday-loans-credit-rating/

boo_star · 30 December 2017 at 1:23AM

sourcrates wrote: »

It can be swings and roundabouts, some lenders view payday loans negatively, others more positively.

The key issue is that it says settled, with no balance owing.

It may not be as bad as you perceive it to be.

Info here :

https://www.cashlady.com/blog/payday-loans-credit-rating/

I think it’s highly unlikely that any lender would view a payday loan as a positive, even if repaid in full.

Neutral, perhaps if paid on time and several years have passed, but it’s I can’t see any lender viewing short term, high interest borrowing as a plus.

cjv · 30 December 2017 at 3:04AM

I think this might be the same thing that has happened to me.

This month there is an account with "Myjar" that has appeared as a closed account on my credit report for £100. It states opened in 2010, settled Dec 2017. No late or missed payments.

This account went into default in 2011 with many missed payments and dropped off of my file at the start of 2017 (6 years from default). I know this as I was checking my report regularly around that time with the intention of rebuilding my history, paying attention to the dates when defaulted accounts would be removed.

I have no way of proving this as I did not keep default notices back when I was in financial trouble.

I have sent a query through Noddle with this information, but I am not sure if there is much else I can do.

nyermen · 30 December 2017 at 9:09AM

I think it’s highly unlikely that any lender would view a payday loan as a positive, even if repaid in full.

I have done work in the modelling area - not for application scorecards themselves, but for the subsequent "Basel PD modelling".
I can't give names, but some of them haven't considered the type of lender (Therefore, a debt that shows as paid off without any bad history, is considered positive so to speak). However, some definitely have considered the type of lending.
I should also add that a "behavioural scorecard" analysis is often done during a remortgage (after all, the application was completed at the initial mortgage), so such information could affect the offered renewal rate as well (again, potentially up or down...)

I guess the question is, are they allowed to record such an entry. It must accurately reflect the situation - so is saying it was settled in 2017 accurate, and are they allowed to record it on that date. Apologies, I don't know the answer to that, hopefully someone else does.

PayDay Loan Company Added Account 6+ years after...

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