Will an Unenforceable Credit Agreement affect my credit rating?

This is a burning question that is frequently asked in the financial claims industry. The truth is thought that it if you go down the unenforceable route it ‘could’ have some affect on your credit rating. In theory it shouldn’t do as if a contract such as a credit agreement is proved unenforceable, then the agreement between you and your debtors is effectively flawed and never existed in any legal stance in the first place. That is the theory, The reality can be quite different.

Lets assume you have been successful in proving that your credit agreements are unenforceable and your debt has been written off, some creditors however will simply ‘overlook’ correcting your credit file and make a mark against you, although legally they shouldn’t. Make sure you write to them after the dust has settled and request that they remove any record of a credit account with them from your credit file.

Asking your creditors to remove information about you from your credit file

Now this sounds a lot easy than it is. If you have been successful in writing off your debt it’s highly unlikely that your creditors are going to bend over backwards trying to help you get your credit file squeaky clean. It may take a lot of communication back and too before you get anywhere and you may even need to involve a solicitor if they absolutely refuse to play ball, which could become costly.

There again you may find that your lender is more cooperative than originally expected and they may straighten it out for you in a matter of weeks. To summarise, it can be entirely dependant on your case and how cooperative your lender is, but the best rule of thumb is to assume that your credit rating will be affected if you are successful in proving your contract is unenforceable. This way you are prepared and know what to expect. But look at the bigger picture… if your lenders are going to write off a huge sum of money for you then you should expect some collateral damage. On that basis you should be asking yourself ‘how important is your credit rating to you’?

How important is having a good credit score to you?

What does a good credit score mean to you? Is it important to know that you are worthy of holding a credit card? If you are struggling to meet your repayments on your debts then taking out more credit is probably the last thing on your mind. Maybe for some of us it’s a status thing, either way, if you are considering legally writing off your debt and your are worried how it may affect your credit rating then you should ask yourself the following questions;

1) Have you missed payments your debts?

If you have missed payments on your debts it is highly likely that your credit rating will have already been affected, so it won’t make any difference if you go down the unenforceability route.

2) Do you actually need to have a good credit score current time?

Unless you are about to purchase a property or maybe start a business, where you would need your credit rating to secure a mortgage or business loan, then ask yourself, ‘is it important that I need a good credit score at this time’?

3) Would a bad credit score actually affect my day to day life?

I think not. You only need a good credit score if you want to;

a. Borrow more money and get in more debt
b. Buy a house, property or intent to re-mortgage

Summary

After the financial disaster the banks caused over the last year or so I don’t think many of us are in a rush to take out more debt, and even if we could would we want to? If you have a glowing credit rating you may still struggle as some lenders are still tightening the strings on lending until we are completely clear of the recession. This article is in no way trying to promote that a bad credit score is a good thing, its just merely trying to point out the relevance and importance of credit scoring and how it affects you in day to day life. So if your credit rating is of a concern, take a moment to think, ‘Is my credit score really that important at this time?’

If you are unsure about any of the topics raised here and would like more information don’t hesitate to call us on 0800 043 2027.