Improving credit score: Defaults / Part-payments
Discussion
Looking at applying for a mortgage in the next 6 months or so, joint application with my girlfriend. My credit shouldn't be an issue, but hers could/will be.
The situation is that a few years ago when she was in uni, she and her housemates set up bills for the shared house. The broadband bill was in her name, but for some reason the direct debit was setup to go out of her housemates' account. She paid her share of it to them each month and assumed it was all paid.
Fast forward to a few months ago: She started receiving debt collection letters for the outstanding broadband bill. It looks like her housemate never actually paid a penny, and as it was setup in her name, she's obviously liable for it. The broadband company agreed to accept a lower amount than the full bill, and they agreed it could be paid over three instalments.
She's now paid all of the instalments, but checking her credit report it still shows that part of the bill is still outstanding. The payments she's made over the past few months show up, but it still says she owes more (specifically, the difference between the original bill and the lower amount accepted by the broadband company).
So, where to go from here?
The situation is that a few years ago when she was in uni, she and her housemates set up bills for the shared house. The broadband bill was in her name, but for some reason the direct debit was setup to go out of her housemates' account. She paid her share of it to them each month and assumed it was all paid.
Fast forward to a few months ago: She started receiving debt collection letters for the outstanding broadband bill. It looks like her housemate never actually paid a penny, and as it was setup in her name, she's obviously liable for it. The broadband company agreed to accept a lower amount than the full bill, and they agreed it could be paid over three instalments.
She's now paid all of the instalments, but checking her credit report it still shows that part of the bill is still outstanding. The payments she's made over the past few months show up, but it still says she owes more (specifically, the difference between the original bill and the lower amount accepted by the broadband company).
So, where to go from here?
- Is the fact that the account shows as being in default a mistake on the credit report (as she's now paid the agreed amount)? If so, who should be contacted to rectify it (broadband company, or credit reference agencies?)
- Does the fact she paid a lower amount than was owed negatively impact anything? If so, will paying the difference now to settle the original, full amount improve anything?
- As she only recently became aware of this, she's been clocking up defaulted payments every month for the past few years, just how bad is this?
- How badly is this likely to affect a mortgage application? The full amount owed was only a few hundred quid, so hardly loads, but as she has no other real credit history it looks quite bad!
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