Copyright 1996 MGN Ltd. January 9, 1996, Tuesday SECTION: FEATURES; Pg. 17,
18 LENGTH: 2054 words
HEADLINE: CREDIT WHERE CREDIT IS DUE;
UNLESS, LIKE PAUL, THEY BLACKLIST YOU IN ERROR;
CREDIT COMPANIES BLACKLISTINGS DO GET IT WRONG : MONEY
BYLINE: John Husband BODY:
EVERY year the January sales trigger a surge in applications for credit. Shoppers, keen to snap up bargains but short of cash after an expensive Christmas, ask for a loan. Most get one with no trouble. But some are turned down - often, as in Paul Smith's case, through no fault of their own.
The lender has checked them out and, rightly or wrongly, they have been blacklisted by a credit reference agency. Paul ran into problems after a motorbike accident. Needing money for a new machine, he applied for a loan - only to be refused because a credit reference agency had a court judgment for a pounds 418 debt recorded against him.
Paul, from south-east London, knew nothing of the debt and made further inquiries. He learned that because of a dispute over who was responsible for the accident, his insurer had not paid a repair bill in time. So, without his knowledge, the other side got an award against him in a Manchester court.
The insurers have since sorted out the payment between them. But Paul is unfairly lumbered with a court judgment against him which may affect his creditworthiness for up to six years. HE SAYS: "I thought that the other driver was equally reponsible for the accident and wanted to settle the claim 50/50. "He had legal cover so I expected him to issue a summons against me, giving me an opportunity to argue my side of the story. "I felt we should each meet our own repair bills, which would not have affected our no-claims discounts. "But, instead of a summons, the next thing I heard was that my insurer had gone ahead and settled the claim. "Now it seems that, having got their money, the other side still went to court without telling me."
Most loan firms, banks, building societies and credit -card outfits won't lend anyone a bean nowadays without first running a check with a credit reference agency. The two main agencies, Equifax and CCN, collect information from the electoral register, court records and credit providers.
A typical file will show: YOUR last three addresses and who lives there now. ANY court judgments for debt against you. PAST applications for credit, how much you owe creditors, arrears, and details of past payments, including how many instalments were paid late or on time.
IT IS almost impossible to avoid getting on a credit file unless you never register to vote and never borrow from anybody. The files - popularly known as blacklists because of the damaging information they may contain - give facts in your favour, too.
They make no value judgment. It is up to lenders to reach their own conclusions from the information provided. Everyone has the legal right to see what information credit reference agency files hold on you and to correct it if it is wrong.
We asked seven volunteers to send off the required pounds 1 fee and ask for a copy of their files. Four were accurate. Files on the other three - Maureen O'Gorman and Steve O'Brien and Paul Smith - were found to be misleading or unfair in some way.
Paul found nothing factually wrong with his files. But both Equifax and CCN carried the unfair court judgment. When we explained Pauls's plight, both companies said it might be possible to remove the damning court judgment from their record. "It appears to be solely related to the insurance claim and is therefore not necessarily relevant to an assessment of his creditworthiness," Equifax said. "If Paul contacts us with written evidence of the details it may well be that we can remove it from his file."
One piece of information none of our volunteers was given was the credit score Equifax awards individuals, based on a system called Wescore 2. Most lenders use their own credit scoring systems to decide whether to lend or not.
We asked another research firm, Instant Search, to check our volunteers' files and tell us the scores for the Equifax system. Maximum is 270 points, which means that the chances of you having a court judgment against you for debt within the next two years is 1 per cent. Ratings go 190, 5 per cent; 170, 10 per cent; 150, 17 per cent; 120, 39 per cent; 60 or less, 90 per cent. Paul scored a rock bottom 18, making his chances of getting credit right now very slim.
His best way to turn the tables is to contact the Manchester court and ask them to record the fact that the outstanding bill was paid. THE record held by the Registry of County Court Judgments can then be corrected. From there, the amendment will be sent to all major credit reference agencies. Paul should take up the Equifax offer to get the judgment removed from their file.
Steven and Maureen, whose cases we also report on this page, should contact the credit reference agencies, asking for a note of clarification to be added to their files. Equifax said that if the companies involved in both these cases were satisfied that payments were made on time, they could instruct all credit reference agencies to make the necessary corrections to Maureen's and Steven's files. WE'RE INNOCENT VICTIMS OF THE BUNGLERS MAUREEN O'Gorman, single mum of Daniel, nine, from Croydon, was turned down cold when she asked her electricity board for a fridge freezer loan.
Her credit-rating file showed her as being three months late with a TV rental payment. What it didn't show was that this was the result of a mix-up by her bank which had mistakenly cancelled her standing order when, several years ago, she switched from a black-and-white to a colour TV. "I can only think that it was this that stopped me getting credit."
STEVE O'Brien, a bank worker from Ilford, Essex, was far from suited after taking a loan with Burton. Months later, he discovered a string of late repayments had been recorded against him, though he'd always handed over the cash on time. "I used to pay into the nearest branch whenever I was passing. "But what I didn't know was that if you paid that way it could take ages to reach the company, so I was constantly being put down as late even when I'd paid on the nail." GRAPHIC: COURT ON THE HOP: Paul and his wife Sue are still paying dearly for a judgment made behind Paul's back