Chased by debt collectors. Refused a bank loan. Put on a higher-interest mortgage. These are just some of the devastating consequences of having an error on your credit report.
Which? spoke to dozens of people whose credit scores were wrecked by incorrect records and learned more about the fight they had to go through to get their data updated, including James Insell who took a debt collection agency to court over an unfair default notice - and won.
To limit the damage they can do, errors should be fixed as quickly as possible. But our investigation has found that all too often companies neglect their duties, leaving individuals facing a fight to set the record straight.
Compiled by credit reference agencies (CRAs - the three main ones in the UK are Experian, Equifax and TransUnion), it contains information like your current and previous addresses, bank accounts and mobile phone contracts.
Whether due to sloppiness, technical error or miscommunication, incorrect information can sometimes find its way onto your report.
However, people only tend to realise when they get rejected for credit. Six in 10 Which? members* told us they hadn't checked their credit report in the past three years. Some people have never checked theirs - 46% of the UK population, according to a recent YouGov survey.
Even a seemingly small error can have huge consequences.
Take missed payments, for example. They are one of the biggest red flags for lenders and they can stay on your report for up to six years. Worringly, they are the most common entry people dispute, according to Experian - accounting for just under a quarter of the queries it receives.
If you don't believe you owed the money in the first place, then months or years of credit score damage are especially hard to stomach.
Pamela Haslam saw her credit score plummet after Eon Energy incorrectly reported three missed payments at her unoccupied property: 'I owed nothing until the next invoice in September,' she told Which?.
Her lower credit score meant she faced higher rates when applying for a mortgage. Pamela managed to get Eon to admit two of the three months of missed payments were incorrect so she didn't have to pay more for her mortgage. But other people haven't been able to avoid the negative consequences of a damaged credit score.
James Gaby was unable to borrow the full amount he needed for a deposit on a house all because of a missed payment on a Vodafone account for his daughter, forcing him to eat into his savings instead.
'The consequences for the individual can be severe, they don't feel proportionate,' he told Which?. 'You do feel you're slipping through the cracks when your credit rating can be so dramatically affected by one mistake.'
When we reached out to Vodafone, they told us, 'After investigating the case, we can confirm the correct collections procedure was followed and, as such, we are not able to remove the default payment mark from the customer's credit history.'
James told us he found Vodafone extremely difficult to deal with when disputing the missed payment. He's still waiting for the firm to send him a letter of deadlock that he can use to escalate his complaint to the ombudsman. Over a year after Vodafone promised to send the letter, he still hasn't received one.
If a lender keeps chasing you for a missed payment - even if you're not responsible for it - you could end up with a default being recorded on your report, or even a County Court Judgment.
James Insell received a court claim from debt collection agency Lowell in 2020, after Vodafone continued to demand payment for a mobile phone contract he'd been mis-sold in 2017.
'I knew I was in the right,' he told Which?. 'I wasn't going to pay anything. So I thought, right, I'm going to have to defend myself.'
James made the bold decision to issue a counterclaim against Lowell for damages done to his credit score.
In a victory for victims of credit report errors, the judge decided there was no debt owed and Lowell had breached their duty of care to James by reporting the default to CRAs.
'Debt collection agencies can use credit reporting as a weapon,' says James's barrister, Andrew Smith. 'You're effectively saying: u201cPay this, or I'm going to tell everyone you're a risk to lendersu201d. In the UK, you could call it demanding money with menaces; in Scotland, you could call it extortion.'
Vodafone did not respond to a request for comment on this case.
As James Gaby and James Insell's stories show, it can be extremely difficult to get errors removed from your credit report. That's especially true for fraud victims.
We heard from eight people whose credit reports were blighted by criminals applying for financial products in their name.
David Gledhill was scammed by a mobile phone fraudster in June 2021, resulting in three hard searches appearing on his credit report. He told Which?: 'I'd been building back my credit score after a few years in the doldrums so I was gutted.'
Two of the lenders that made the searches - Virgin and EE - promptly removed them. But O2 took almost four months to take it down, having promised David it would take 10 days.
O2 told us he shouldn't have been given this advice as it takes 30 to 60 days for them to issue an update. Even so, O2 clearly failed to act within this timeframe too. After Which? got involved, O2 escalated the matter to the CRAs again. It said: 'We are in touch with Mr Gledhill to apologise for the incorrect information he was given by our advisers, and we have fed back internally to prevent this happening again.'
Other fraud victims told us they also struggled to get false entries removed. This can be explained by the fact that CRAs sometimes treat individual errors as separate cases, meaning some errors with a shared cause can be left unaddressed.
Tony Blackman was horrified to discover 12 hard searches for car insurance on his report. He told Whichi?: 'TransUnion's system seems to be to allocate each query to a different person and it was a nightmare trying to reconcile which of their reference numbers related to which of the 12 entries.' At one point he received four or five letters from TransUnion in the same day relating to the entries. He wrote three times to TransUnion asking for clarification about which error was which and which ones were being investigated, but never received a response.
TransUnion did not respond to our request for comment.
If you find an error on your report, this is the process to get it removed:
Unfortunately, there's no guarantee an error will be removed unless the lender grants the CRA permission. If it doesn't, and your records aren't updated, your next option is to add what's known as a 'notice of correction' to your file, allowing you to explain why the error is there.
According to UK General Data Protection Regulation (GDPR) principles, companies are supposed to correct inaccuracies held in your personal data 'without undue delay'. But when we spoke to hundreds of people who'd discovered an error on their credit report, 13% said it took months before it was removed; some said it took years.
We looked at the processes CRAs and lenders use to handle queries to see where things are going wrong and identified various points at which CRAs and lenders aren't meeting their responsibilities to customers.
For example, although CRAs say they will contact the lender on your behalf, they will sometimes tell you to do this yourself, costing more of your time and energy.
Fraud victim Tony told us TransUnion left him in the cold: 'They said that some of the insurers and brokers who had used their services - which then generated the entries - wouldn't co-operate, so I then had to write to them directly.'
Experian suggests it's sometimes a good idea for the individual to go directly to the lender before going to the CRA, especially in cases that involve complicated issues such as ID fraud, where you may be asked to provide the lender with a specimen signature. But this isn't always good advice.
First, if you go to the lender without involving the CRA, you won't benefit from the 'notice of dispute' that CRAs put on your credit report. Second, going directly to the lender will only hasten a resolution if the lender takes your dispute seriously, which isn't guaranteed.
While CRAs must get back to you within a month, they can't rectify your credit information until the lender has issued the update. If the company won't engage with you - as a number of the people we spoke to found - then the error could stay for months on end, leaving you in limbo.
Experian told Which?: 'only a small percentage of the people who have access to their credit report raise a data dispute with us (roughly 1%), and only a third of those result in the data being changed. We work hard to ensure credit reports are accurate, including carrying out hundreds of checks to look for obvious errors. We also have robust support in place should someone check their credit report and find an error. This includes marking any disputed entry as unreliable while we investigate it with the relevant lender.'
However, just because Experian doesn't receive many data disputes doesn't mean credit report errors are unusual. Of the people in our survey* who told us they'd found an error, 22% didn't report it.
This could point to a lack of awareness about the importance of maintaining an accurate report. But it's possible people just aren't sure how to dispute an error, or who to take it up with.
If there was a way to raise a dispute with all key parties at the same time, this might make people more inclined to get report errors amended. As it stands, the burden falls on you to contact the various firms or financial providers involved.
It's especially worrying that so many lenders seem to be unaware of their responsibility to do this on your behalf.
The Information Commissioner's Office (ICO), the authority which upholds data rights in the UK, states that companies must adequately train staff to be able to recognise and action inquiries about credit information. It's clear more needs to be done to ensure that this happens.
Finally, our research shows that firms and CRAs must work harder to ensure errors are investigated in a timely manner. The ICO stipulates that inaccurate personal data must be corrected with particular urgency if it could cause serious harm to the consumer.
More should be done to ensure CRAs and lenders act quickly when an error occurs that could seriously harm someone's financial reputation.
*Survey of 14,000 Which? members conducted in August 2021.
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