Credit rating damage that's not my fault - what now?
I do everything I can to keep a good credit rating but my bank failed to transfer some cash leaving me with a missed repayment on my record.
How do I tell lenders that it wasn't my fault?
We can play by all the rules when it comes to keeping a clean credit rating but sometimes, a report is tarnished by reasons outside our control.
Such credit rating concerns came to the fore when software glitches at the Royal Bank of Scotland in both 2012 and 2015 resulted in delayed transactions for thousands of customers across the banking group, including those with accounts at NatWest and Ulster Bank.
On a smaller scale, IT mistakes that cause late payments have become almost commonplace.
And it doesn't stop there. Linked accounts, for example, could have an influence on credit worthiness that has nothing to do with our own behaviour.
We'll look into all of these issues - and when, if ever, we should just accept the blame - in this guide.
Late or missing payments: what to do
As we noted above, late payments are perhaps the classic example of a black mark on our credit reports that can be the result of events out of our control
1. Check accounts
As always, the best advice is to take as much action as possible before a problem arises.
Ensure that automatic payments are set up with enough time for the money to be transferred and, if a problem seems likely, check any accounts to which payments should have been made to see if they have been received.
If a payment has not gone through, contacting the organisation expecting the payment to inform them of the reason for delay can often head off the problem.
2. Check reports
The Payments Council advises those who fear they might have been affected by late payments to request a copy of their credit report from one of the following three credit reference agencies for at least the next three months:
- Call Credit (more commonly known as Noddle)
In the wake of the 2012 Royal Bank of Scotland glitch, the bank promised to reimburse anyone affected by the problem for such reports, as long as the request was made within a set period of the incident.
Find out more about accessing credit reports cheaply or for free in this guide.
3. Notice of Correction
If a bank or other financial lender declines to amend a problem that we're certain is not our fault, the final step is to add an explanatory note to our credit reports.
This is known as a Notice of Correction, an up to 200 word statement placed next to the offending error for potential lenders to see.
Potential lenders are obliged to read this note; bear in mind that while it helps explain any damage caused, it can slow down any decision from such lenders on whether to offer a product or service.
Influence of others: what to do
As we said above, though, our credit rating worries may not lie in a bank glitch but with another person and their financial behaviour.
When people are financially linked because they share responsibility for a debt or current account, lenders can check both individuals when one applies for new borrowing.
If one party is in debt or constantly missing payments, both are affected.
We've looked much more deeply into this problem and its solutions in this article, but we'll briefly go through the strategy here.
People can financially unlink themselves fairly easily.
Once a joint account is closed, it will often still be listed on a credit file - sometimes for years - so it's often a good idea to get hold of a credit report to check.
It can be a matter of minutes to request a Notice of Dissociation from a previous connection; applicants need to prove that they have no active financial connection with the person.
In the case of a household bank account, whether with housemates or a former partner, we'll usually need to prove that we've been living separately for at least six months; former spouses will need proof of their divorce.
A successful application will result in the credit agency filtering out any information about that person so that potential lenders can no longer see it.
Even if the association isn't negative, it's worth making sure that the connection doesn't last any longer than it needs to.
Fraud: what to do
The definitive example of a credit report problem that is not our fault is a case of fraud.
Despite awareness campaigns by the likes of Action Fraud, Cifas, and the credit agencies themselves, identity fraud is an increasing problem.
Criminals need very little of our personal information to be capable of applying for credit or buying expensive goods and services in our name, running up huge debts and causing all manner of damage to our credit files as they do so.
While many financial service providers are fairly adept at sorting fact from fiction, plenty of victims don't realise they've been targeted until they have problems passing a credit check further down the line.
1. Report the fraud
The most important thing we can do is alert our bank or building society if we have the slightest suspicion there's been fraudulent activity on our account, so that they can take action.
This is yet another reason to keep a regular eye on our credit reports, as we'll be more aware of any unusual or unexpected applications or searches made in our name.
Taking swift action to report any potential instances of fraud on our accounts is key to protecting our rights as victims and making sure we don't lose out financially, as we explain in this guide.
2. Take preventative measures
It's also worth taking preventative measures to ensure that fraud isn't repeated.
In cases of identity theft, for example, it's worth changing passwords - and watching for attempts by someone else to change our passwords - and asking for our credit report to be flagged so that lenders make an extra effort to verify the identity of an applicant before extending credit to individuals with our details.
Cifas have written a guide for us explaining how to deal with identity theft which includes more information on how to flag reports.
Accepting the blame
Finally, it's worth noting that although banks and other institutions can negatively affect consumers' credit reports, they won't necessarily take the blame.
In the case of late payments, for example, banks often warn that transfers between institutions could take some time.
If, after they've warned us that this could be the case, we set up - or fail to adjust - a payment that could miss the due date, the bank will rarely accept liability.
For that one small error on our part, we can be left with a mark on our credit file for as long as six years - but in such cases, it's often best to just accept the blame and move on with improving credit history.
As we've noted above, monitoring our credit report regularly is often the best way to assess the damage - and taking steps to prevent the same issue occurring again will help lessen the impact of that initial error.
We've more information on how to improve credit ratings quickly and longer term in this guide.