Credit files hit by banks' IT failure
Borrowers warned to make sure missing payments don't damage their debt record
Consumers are being urged to check their credit records or risk being rejected for a loan or mortgage as a result of the recent computer chaos at a host of British banks and Nationwide building society.
Hundreds of thousands saw their accounts plunged into the red and payments bounce at Royal Bank of Scotland, NatWest, Ulster Bank and Nationwide and fears are growing that some individual credit records could have been damaged as a result. Such was the size of the problem that RBS announced on Friday that it has put aside £125m to pay for the costs of the meltdown.
Leading credit reference agency Equifax told The Independent on Sunday that it could take as little as a week for a missed payment to damage an individual's credit record. However, some of the payment problems took longer to resolve. As a result account holders, through no fault of their own, could now have a damaged credit record which could lead to loan applications being refused or interest rates being more expensive.
"In the current environment, I cannot emphasise enough that banks want a totally unblemished credit reference. We have had clients refused mortgages and the reason given was a late payment even though they have never actually missed a payment," says Nigel Stockton, a director at mortgage broker Countrywide
A fortnight ago, duplicated payments were taken out of more than 700,000 Nationwide debit cardholders, which caused about 50,000 customers to fall into unauthorised overdrafts or suffer bounced payments.
And at the end of June up to eight million people at RBS/NatWest were left out of pocket after an IT glitch saw payments fail. Ulster bank customers were likewise affected but for longer.
But although the banks and Nationwide have said that individuals will not be left out of pocket as a result of their IT failings, such care doesn't seem to stretch to credit records with the onus on individuals to check they haven't got a black mark on their files.
This is an approach which has drawn fire from consumer champions including Richard Lloyd, the executive director at Which? "The banks must do everything in their power to make sure their customers who have been affected by recent IT glitches do not have their credit records damaged," he says.
In response, a Nationwide spokesperson said that in a "small number of cases", where it believes its customer records might be affected, it is "proactively working to correct any files to ensure that no record is left from this incident". And RBS/NatWest said it was "actively working with credit rating agencies to correct any impact" and offered to reimburse the cost of customers wishing to check their credit files.
But experts stress that the onus is on individuals to check their own credit reports. Usually, credit reports cost £2 or an annual subscription fee but affected customers can claim for the cost of a single credit check through their bank or building society before 31 October.
Once a missed payment is recorded on a credit record though, it can be time consuming and difficult to have it expunged. It is up to the firm which has lodged the missed payment on the individual's record to remove it. It has to be approached directly and the affected individual will be at the mercy of its accounts department as to whether or not a correction is made.
Consumers who are unable to get their records corrected can get the credit reference agency to put a notice on the file explaining the circumstances of the missed payment. But, lenders are not duty bound to take such notices into account and in the current harsh financial climate even the whiff of a missed payment or bad debt can lead to rejection.
Mr Stockton is urging consumers to be proactive, particularly as a failed loan or mortgage application is also recorded on an individual's credit file and in turn can lead to future rejections. As a result, unaware consumers could find themselves stuck in a vicious circle of credit rejection:
"If that original non-receipt of payment led them to a breach in the credit record, did the bank make good their credit reference? Have they checked to be sure? Do so now," Mr Stockton urged.
Credit reference agency Callcredit is telling consumers in the first instance "to monitor their credit report closely, particularly over the next three or four months". It is also "working closely with all of our data providers to make sure no one's credit report is unfairly affected".
Neil Munroe from Equifax is urging consumers to double check their bank statements and bills to ensure that any payment problems have been fully put right in a timely manner.
"Our advice is that if someone is concerned that a payment hasn't been received. First they should check any accounts to which payments should have been made to see if they have been received. If not, they should contact the lender to advise them of the reasons for delay," he added.
Repairing a damaged record
The payment problems have been resolved and most customers will be back in the financial position they were in before the IT chaos ensued.
Consumer groups, though, are urging people to check their statements closely and if they were affected to obtain a copy of their credit report. RBS has promised to refund the cost of a obtaining a credit report for its customers.
You can check your credit report for free at noddle.co.uk or pay £2 to a credit reference agency including Callcredit, Experian or Equifax.
Individual lenders have the ultimate decision as to whether to remove a late payment from someone's report caused by another company. If it refuses you can add a notice of correction to your report so anyone using your data in the future is aware of the circumstances.
If you don't get the help you expect you should follow your bank's formal complaints procedure. Failing this, you can escalate your complaint to the Financial Ombudsman Service.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Russell Brand says he will 'probably' give up acting to focus on his revolution
- 2 Watch what happened when food critics were unknowingly served McDonald's
- 3 David Beckham's Haig Club whisky is exactly what’s wrong with the Highlands
- 4 Queen's first tweet: Reply telling Her Majesty to 'f*** off' broadcast on BBC News
- 5 #AskNigelFarage: Twitter starts hilarious Q&A for Ukip leader
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Tony Blair 'says Ed Miliband will lose 2015 general election'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Putin: The US is to blame for almost all the world's major conflicts
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
Day In a Page
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village