My credit rating, and other endangered species...

[denny]

One of the major areas of collateral damage from my bike accident was my credit rating. Not having a job for a year led to me completely losing control of the debt mountain I had been cheerfully perching on top of up until that time.

Anyway, I just got pointed to this site that lets you check your own credit rating report for 13 quid, which I thought seemed well worth it. The news is actually not as horrendous as I was expecting it to be overall, but there are two credit agreements (my mortgage and my biggest loan) on which I missed payments for 3 months, which is considered extremely bad. The combination of these two missed payments seems to be the only thing that takes my credit rating from being 'not too shabby' to 'downright untrustworthy'.

Rather unexpectedly, the site has a feature whereby you can submit a note, up to 200 words, to be added to your file to explain any facts within it which you feel are 'true but misleading'. This note will be supplied to anybody who requests your credit rating information in future.

Here's what their FAQ says about adding such notes:

If there is information on your credit report that is factually correct but you believe affects your ability to obtain credit then you can add a Notice of Correction to your credit report. This allows you to add a statement of up to 200 words explaining why the information is misleading.

Some examples are:

* You have recently changed your name (i.e. recently married, separated or divorced)
* You are behind on credit repayments due to redundancy or loss of employment or long-term illness.

Once the Notice is on your credit report, it will be shown to any potential lenders when you make an application for credit. Equifax has up to 28 days complete this process.

(a) Should I add such a note to my file? The second example reason given seems fairly applicable.
(b) If I do, what do you think of this one:

The missed payments on my record are almost all from the period following a motorcycle accident in 2003 which caused me to lose my job and be classed as medically unfit for work for over a year. Following these problems I placed my house on the market and eventually sold it, at which time I cleared most of my outstanding debt. Unfortunately the sale took some time to progress from initial offer to completion, and this led to me missing my Natwest mortgage and Prudential loan payments for 3 months toward the end of this period.

Both companies involved were kept well informed of my problems. Natwest's debt management team verbally agreed with me on the phone that I could leave the outstanding mortgage payments to be folded into the settlement sum for my mortgage, and so I do not understand why this has been recorded as an unagreed lapse in my payment history with them. Prudential were unwilling to make an agreement to spread my loan payments out over a longer period so that I could afford them until the house sale completed, leaving me with no viable options regarding my debt with them at that time.

I can't think of any reason not to do it off the top of my head - except that it seems a bit whiney - but I'm edgy about doing anything so permanent as adding to my own credit rating report. On the other hand, it looks like my missed payments are going to stay on my record for some years (up to six), so it might be worth balancing them out with something.

Thoughts?

Comments

[bart666.livejournal.com]

You pointed me to this post on IRC, and here are my thoughts.

The fact is that attaching notes to your credit history has little (if any) weight on deciding your application for credit. Credit referencing agencies tend to process thousands of references a day, which each reference getting a mere cursory glance from the computer operator before clicking Yes or No - such a glance is usually at your credit score in big numbers.

If your credit score is really low (i.e. sub-125) they will instantly click No, or even the computer system itself will not even present such an application with an automatic rejection.

However, there is a review system in place that is run by many agencies. If your score is not above a particular threshold your application will not be a Yes or No, but a Possible, and this is where the application is referred to higher levels, who *may* read everything on the file.

For large credit purchases, it is sometimes a requirement to have a guarantor that must provide references on your part (such as a close friend, a respected business person you have worked with, your solicitor, but *not* family members). Only upon suitable receipt and validation (and judgment) of these references will they then click Yes on your application.

Of course, no credit checking system is the same. Different agencies run different practices, use different credit checking mechanisms, or sometimes, don't even bother checking. It's all very up in the sky, and all down to how the mood of the operator is that day (to a degree).

But back to your note. In all honestly, anything that you think will benefit yourself when trying to arrange credit - such as a simple explanation as you have presented - must be good. As long as you don't write utter rubbish (which you haven't), someone will listen eventually. Add the note and think nothing more of it.

Importantly, you should avoid credit at all times, unless it is absolutely necessary (i.e. large purchases or property).

And hi! Glad to find someone on IRC that listens to what I say once in a while :)