Incorrect default placed on credit file

[spsdjone]

In Feb this year i settled a lease hire agreement with VW finance, who then collected their car.

A month later I get a letter from my credit card provider telling me they are cutting my limit in half, essentially bringing it down to my current balance.

Having never missed ANY payment, ever, I queried this with them and was told that it related to adverse data on my credit file...at the time i was livid and adament they had got this wrong!

I checked my credit file and found that VW finance had not closed off my account and had registered a default against me for their February rental, despite confirming they had closed it all off.

VW finance have admitted full liability and removed the default, but havent really an explanation as to why they hadnt closed off my account and then registered an immediate default.

They have offered £100 in compensation, which i have rejected, mainly due to the following:
- My credit card provider will not simply increase my limit back to what it was originally and i would now have to apply formally, despite getting the default removed
- The card in question regularly offered good balance transfer options, which I used, but no longer have access to
- The embarassment of the initial call with the credit card provider where i essentially told them they were lying

Overall, the lack of care they took with my credit file and the mess they have left, means im loathe to accept £100 to draw a line under it.

does anyone have any experience of taking this further? I even suggested them make contact with the card provider directly to explain they had ballsed up, which they thought was a good idea, but make no reference to in their resolution letter.

thanks

[Debt Camel]

Re: Incorrect default placed on credit file

I would be surprised if you were awarded much more than £100 by the financial ombudsman for this sort of issue. VW have corrected the problem promptly. There is no clear monetary value that you have lost.

I would expect the credit card provider would increase your limit if you ask. But why not do yourself a favour and just reduce your credit card debt?

[Diana M]

Re: Incorrect default placed on credit file

CRAs report the credit limit history so if yours has been reduced (by half) on one account that could flag up to anyone searching your file.

They could assume that you reduced it on purpose (albeit not really necessary since you could just not use the available credit).

Or it could be viewed as negative for some reason.

On the plus side when applying for a mortgage the lender will assess affordability which includes available credit even if you're not using it. The lender may take the view that you've got enough potential credit (which could turn into debt). Lenders can reject applications or offer less then you want based on financial 'over commitment'. So the reduction could work in your favour.

It's also not unusual for a lender to make a mortgage offer conditional on certain credit cards etc being paid off before releasing the funds. Solicitors may be asked to give an undertaking to that effect.

So it's swings and roundabouts when it comes to assessing compensation.

Di

[Diana M]

Re: Incorrect default placed on credit file

Unless their resolution letter is a Final Response basically refusing to enter into any further correspondence with you, then why not write back and ask them to provide a generic 'To Whom It May Concern' letter admitting it was their error for which they have apologised (have they?) and willingly corrected.

Keep that in case things develope in future because a written confession is always useful especially in court.

I see no harm in referring the complaint to the Ombudsman because the business being investigated has to pay them £500 (or thereabouts) for each complaint investigated so they'll get punished that way. I personally believe in retribution when someone has upset me

Di

[R0b]

Re: Incorrect default placed on credit file

does anyone have any experience of taking this further? I even suggested them make contact with the card provider directly to explain they had ballsed up, which they thought was a good idea, but make no reference to in their resolution letter.

I have from personal experience against Santander, similar situation to you where Santander placed a default marker, I threatened legal action, they then wrote to me confirming that it would be removed and that the account would be closed down. Unfortunately they did remove from Experian but left the default on other credit reference agencies and when I applied for credit it was refused on this basis as the default was recent and also reduced my credit score (which is when I realised they didn't remove it from every CRA 18 months later). The end result was that I issued a claim and within 2 weeks of issuing it was settled. They agreed to pay me £1,300 (I was claiming £1,500) and remove all adverse entries relating to the agreement mark it as 'settled' and to refrain from recording any further entries in the future.

Obviously the circumstances are slightly different since your issue has had a direct effect on your credit limit which they are now refusing to increase. Legally speaking, it is a breach of data protection (Principle 4) for failing to keep your information up to date and accurate. Although I wouldn't advocate litigation immediately, I do think that £100 is a very low sum and if you do complain to the Financial Ombudsman as Crazy Council has said, your unlikely to get much more, maybe something up to £250 perhaps.

Unfortunately it is difficult to quantify your claim because there is so little case law out there on this area of law that assists you. In one case, a debtor was awarded £750 because the creditor marked the account as defaulted but removed it after a few months. In another case the court awarded £1,000 where they marked the account as a default and failed to comply with the ICO guidance.

But before you start getting all excited about the possibility of getting more compensation that is offered, you will need to weigh up whether it is worth it to you to bring a claim and have you got the time as it can be stressful and time consuming. If they have admitted that they wrongly recorded the default then they can't go back on that but you should do as suggested and get them to increase their offer (maybe suggest an reasonable amount e.g. £250) and confirm in writing that the default was wrongly placed and should not have been there in the first place.

If it ends in a stalemate or they aren't responding back to you, only then should you consider issuing a claim against VW if you feel there is not an adequate resolution. Do note that there is no harm in offering a lower sum than what you might claim by issuing proceedings just make sure to point that out to them in the letter to that effect and that if you are forced to issue a claim, then you will be claiming a sum in the region of X.