How tiny errors on our credit file cost us our dream home
A £24 mistake on a mobile bill. A bungled £112 final energy bill. The result: a credit black mark that can take months to erase
IT HAD taken James and Nichola Bell six months to find the perfect family home.
But the moment they saw the fourbedroom semi-detached house in the village of Saltaire, West Yorkshire — a stunning World Heritage Site — they knew their search was over.
It had an enormous garden their children Charlotte, 16, and Joseph, 11, could enjoy. And it was just a short train ride from Leeds, where their eldest daughter Natasha, 18, is due to start university in September.
They put in an offer the same day and it was accepted. Just a week later, their dream was in tatters.
The couple were told they couldn’t get a mortgage because their credit rating was not good enough.
Unbeknown to the Bells, their previously sparkling credit rating had plummeted from ‘good’ to ‘poor’ because Vodafone-owned Talkmobile had put two black marks on their credit file for missing two £12 payments last year.
James, 45, says he was never told he owed any money. But Talkmobile refused to remove the notification on his file. As a result no bank will touch them. Without a mortgage the couple cannot move house, so their dream home has been put back on the market.
Alarmingly, the Bells’ story is one that’s being played out across the country.
Three weeks ago, Money Mail reported how Strictly Come Dancing’s Anya Garnis almost lost her home purchase after a billing mistake by npower meant she was refused a mortgage. Since then we have been inundated with letters and emails about how tiny mistakes on credit files are leaving people without access to credit cards, mortgages and even mobile phone contracts.
Whenever you apply for a mortgage or a credit card, the bank will check your credit report. This contains vital details about your borrowing history — if you’ve missed payments or gone over your credit limit — and personal data such as your address and if you are on the electoral roll. The information is held by four firms known as credit reference agencies — Experian, Equifax, Callcredit and ClearScore. Banks can ask to see it when deciding if you are a good risk as a potential borrower. But data revealed to Money Mail shows that 2 pc of all credit reports contain errors. When a bank discovers a mark on your file, it will typically refuse you credit for up to six years. This means around one million people are at risk of being rejected for a loan through no fault of their own. And an error can also mean you are refused a mobile phone contract as telecoms giants also check your report when you sign for a monthly deal. Eperts also believe this is just the tip of the iceberg. They say as many as one in three reports — around 16.5 mil lion — have at least one mistake on them. The first most people will hear about these errors is when they come to apply for a loan or credit arrangement and are unexpectedly refused. The worst part is that they can’t even ask the credit agency for the mistake to be removed. The firm which has lodged the black mark has to give the credit reference agency permission to delete it — and this can take months to sort out. In the nine months to December last year, the Financial Ombudsman Service received 229 new complaints about
credit reference agencies — up from 189 in the whole of 2014. Most were about mistakes and the time taken to remove incorrect information.
The surge in complaints is partly down to more financial companies passing on your details to the firms that manage your credit file.
Previously, only banks and lenders would report on your borrowing habits. Now, mobile phone giants, broadband companies and energy suppliers all pass on information about how you manage your account.
This can mean a simple error such as an energy bill getting lost in the post or an outstanding payment on an old mobile phone account that you were unaware of could have catastrophic consequences when it comes to getting a loan in the future.
Justin Basini, ClearScore founder, says: ‘It’s fairly normal for people to miss a small payment or skip a bill at the end of a contract. Many people move house or simply forget. But it doesn’t matter if you owe £7.60 or £760 — it can still damage your credit rating in the same way.’
James and his wife Nichola, 44, owed just £24 to Talkmobile. The couple moved their daughters’ mobile phones to a different provider last year and cancelled the direct debits.
But according to Talkmobile, they still owed two £12 payments.
James says there were no bills, reminders or invoices. The first they learned about the debt was when their mortgage application was rejected.
The couple have since spent two months desperately trying to convince Talkmobile to remove the black marks — but to no avail. James, general manager of a freight company, says: ‘Four-bedroom houses in the area we are looking at don’t come up very often and when they do there is a queue of people waiting to snap them up.
‘It’s so frustrating — if Talkmobile had told me I owed money, I would have willingly paid.’
Talkmobile admitted the accounts were not closed properly, so no marks should have been applied.
David Mann, head of money at price comparison site uSwitch, says: ‘We place too much blind faith in credit reference agencies to maintain accurate data about us, when mistakes are almost inevitable.
‘But the process to correct these errors is lengthy and complicated.’
An added complication is that each credit reference agency holds different data about you.
So if you check one of your files and it appears fine, there could still be a mistake on another.
Moya Flynn, 57, discovered this after being rejected for a mortgage on two separate occasions. She and her husband Francis Ellis, 63, had planned to boost their pension pots by purchasing a new-build property in Falmouth and renting it to students. Buying it this year meant their son Fred, 17, could live there when he starts university in September.
They found the perfect new-build and promptly reserved it.
Then they remortgaged their home in Gerrards Cross, Buckinghamshire, to cover the deposit and furnished the house for Fred to move in. When it was finished last October, they asked Halifax to activate their mortgage — but, instead, the bank withdrew the loan.
It had discovered a black mark on Moya’s credit file with Experian for a missed payment to T-Mobile in 2013. Moya, an HR manager, had been told the account was settled when she’d cancelled the contract.
As soon as she flagged the mistake to T-mobile, it apologised and removed the mark. But when Moya tried to apply for another mortgage with Leeds Building Society, she was rejected again. The black mark had only been removed from the file held by Experian.
Leeds Building Society had used Equifax to check her report and the missing payment was still on it.
By the time the mess was resolved, the house she’d reserved had been re-listed for sale.
The only other property Moya could find that was similar cost £35,000 more. She’d also lost £650 in legal fees, £2,000 in missed rent and time wasted.
Experts say mistakes on credit files can take up to six months to fix, leaving families in the lurch if they need to get a loan quickly.
Even after you’ve persuaded the company in question to remove a mistake, it can take up to 90 days for it to be wiped from your file.
The Pittard family have been fighting for three months to have a mistake removed from their file.
Sarah, 44, and her husband Phil, 50, had a mortgage with her parents on a buy-to-let property.
Her parents decided they wanted to remove their names from the loan so the Pittards re-applied for a mortgage. But their application was refused due to a default for £18 that Talkmobile had told Experian to record on their credit file.
In fact, the couple had been wrongly charged six months after they’d closed their Talkmobile account in July last year. Talkmobile had apologised and refunded the money, but didn’t remove the mark on their credit file.
Sarah, who works in a school near her home in Lancing, West Sussex, says: ‘It’s been extremely stressful. Even when we have time at the weekends to spend with the children, we’ve had to spend hours on the phone trying to sort this out. I just want the black mark removed. It’s their mistake, so why are we paying for it? It’s completely wrong — and all for £18.’
Julie Clark, 61, from Ipswich, contacted Money Mail after being refused twice for a mortgage in February this year.
After moving house in August 2012, Julie, the managing director of a marine electronics company submitted her final meter reading to British Gas.
Several months later, she received a bill sent to her new house in the post. She paid it and assumed the matter was finished.
But British Gas claims it sent her the £112 bill via email in September 2012. It marked her payment as late and a black mark was put on her account.
Her application for a mortgage was rejected. She contacted the energy giant to discuss the mark, but was told it would take six weeks to investigate.
That meant the buy-to-let property she wanted to boost her pension was snapped up by another buyer. Julie was unable to find another before the 3 pc stamp duty hike for landlords in April. She says: ‘I have never missed a bill in all my life. I have run my own business for 30 years, so I do know how to handle accounts.’
A British Gas spokesman says: ‘As Mrs Clark took nine months to pay her final gas bill, a late payment marker was applied to her credit rating. Mrs Clark never contacted us.’
A spokeswoman for Vodafone says it will be amending the Bells’ and Pittards’ credit files immediately and apologised.
A spokesman for EE, which owns T-Mobile, says: ‘We have arranged for Ms Flynn’s credit file to be cleared and apologise for any inconvenience — but would remind customers that requesting a PAC code does not automatically close an account.’
James Jones, head of consumer affairs at Experian, says: ‘ The credit reference agencies employ rigorous checks to help make sure that lenders’ updates are accurate, but mistakes can very occasionally happen.’