People often ask what happens to their credit score if they make a complaint. And what happens if they still owe a balance on the account. Here are some typical questions:
” Lloyds increased my overdraft limit several times a few years ago when I had a gambling problem. But I have recovered and am hoping to get a mortgage soon. I don’t want to complain if it will it harm my credit score, which is now looking pretty good.”
“I asked Lendable if I could pay less but they said this would be reported on my credit record so I am trying not to do this. If I make an affordability complaint will that hurt my score? “
“I still have the Tesco loan and Virgin credit card accounts open, will this claim have any impact on them? “
” I still owe another year on a 118 loan. Is it best to finish paying which will be hard or complain now?”
“I have a payment arrangement for a credit card. If I complain will they stop the arrangement?”
For details of affordability complaints, with a template to use, for the different types of debt, see:
- refunds from a loan;
- refunds from a credit card or catalogue where your limit is too high;
- refunds of interest and charges on an overdraft.
But the answers to these sort of general questions are much the same for all types of debt, although there are sometimes complications for car finance.
Contents
Making a complaint and your credit record
The complaint itself doesn’t show on your credit record
Sending the lender an affordability complaint doesn’t hurt your credit score or show on your credit record. The only exception is that a few catalogue lenders mark the credit record as “in dispute” – this doesn’t affect your score and it is a temporary marker until the lender responds to your complaint, when it is removed.
The only lenders that can see you have made the complaint are the lender you complain to and any other lenders within the same group. So if you complain to Barclaycard that they have increased your limit too high and you bank with Barclays, you should assume your bank knows about the complaint.
What about a future mortgage?
You should avoid applying for a new mortgage to a bank you have made an affordability complaint to. This also applies to different parts of the same group. So after complaining to Lloyds about an overdraft, don’t make a mortgage application to the Halifax.
This is just common sense – there are plenty of other mortgage lenders out there, so why take this risk? If you are using a mortgage broker, tell them about this part of your history, as they can’t see it on your credit record.
But you do NOT need to worry about making a complaint to a bank you already have your mortgage with.
All the major lenders have committed to letting customers who are up to date with mortgage payments to switch to a new fix without another affordability test. So when your current mortgage fix ends, if you just want a new fix for the same mortgage (same amount, same term etc) then this should be fine.
What about future lending?
Some lenders spell this out when they send you a decision. For example Lloyds sometimes says it will put a restriction on your account so you won’t be able to borrow more from them for a 12 month period.
But most don’t mention it. As with mortgages, I would generally suggest applying to a different lender.
Win a complaint and negative marks are removed, so your score may improve
When you win a complaint, any negative marks are normally removed from your credit record. Sometimes this is only done when you have cleared any remaining balance.
As the Financial Ombudsman says:
We’re likely to tell a lender to make sure their customer’s credit file doesn’t have any adverse information recorded about the loans where we’ve identified proportionate checks would have shown that the borrower couldn’t sustainably repay the loan.
If a lender has accepted your complaint, you need to check that this includes cleaning up your credit score.
Can you stop paying when you complain?
Stopping paying a debt & your credit score
Making a complaint doesn’t put the debt on hold. You are not automatically allowed to stop paying it while the complaint is considered.
If you stop making the normal payments to the debt, this is very likely to result in missed payments and then defaults. Or to a payment arrangement being recorded on your credit record.
So if you can afford to make the repayments it’s a good idea.
Every payment you make will either reduce your balance owed or increase your cash refund, so you won’t lose out by doing this.
(There is an exception here if the lender has gone into administration – then carrying on paying may mean you get a lower refund. Ask in the comments below if you think this applies to you.)
When you can’t afford the normal payments…
If you can’t afford to make the normal payment, without borrowing more elsewhere or getting behind with bills, then it’s usually best to ask for a payment arrangement or say you can’t pay anything when you make a complaint.
This will damage your credit record but that may be temporary, as the negative marks will be cleaned if you win the complaint.
If you borrow more to try to carry on making the payments, then you may then get into problems with another debt and end up in a worse position. For example, if you win your complaint about a loan in the end, but your credit card payments have now got too high winning the loan complaint doesn’t sort out your credit card problem…
So in most cases it’s better to confine the problem to the debt you are complaining about. Don’t let it infect the rest of your finances by struggling to make unaffordable payments.
If you aren’t sure what to do, talk to National Debtline on 0808 808 4000 and tell them you are looking at affordability complaints. They can help you decide what will work best for you.
Car finance is a priority debt
With a secured debt such as car finance or a logbook loan, if you stop paying the lender may repossess your car. These secured debts have to be treated as a priority, so you should pay them even if you do get behind with other non-priority debts.
Again talk to National Debtline if you are struggling to pay priority debts or are unsure what to do.
Is it best to wait until a debt is repaid?
No!
It is good to complain as soon as possible (except sometimes for car finance, see below). The sooner you complain:
- the easier it is to get information from your credit record and bank statements to help with your claim;
- the sooner your problem is solved! You will not get more money by delaying a claim.
Also some lenders seem to make better offers to settle an outstanding balance rather than a loan that has been repaid.
You can still complain when the debt is cleared. I am just saying there is no reason to wait for this.
Will a complaint affect a DMP or payment arrangement?
These aren’t affected by making a complaint. The lender won’t suddenly decide you have to pay more, or start adding interest which they had stopped.
This has never been a problem in practice.
Being in a DMP is a very good time to make a complaint as you are in a safe financial situation. If you win the complaint your balance will drop so the DMP will end sooner.
Will getting a refund affect my benefits?
A refund is treated by the benefits system as more money in the bank, not extra income that month. So there is usually no impact on Universal Credit or other benefits affect unless the refund is very large, leaving you with over £6000 in the bank.
Ask a question in the comments below if you are unsure.
How refunds work when you still owe money
Will my bank close my account when I complain?
This is a common worry. But it has been very rare.
One customer said Santander closed her account when she made a complaint about the overdraft affordability, but other Santander customers haven’t had this problem.
If you are worried, you could open another bank account so it’s there if you need it. The challenger banks – Monzo, Starling and Chase – have accounts with good apps and good budgeting facilities.
Refunds are first used to clear a balance
When you win a complaint, and you still owe a balance, the refund is first used to reduce that balance. so that overall you only have to repay what you borrowed.
Here is a simple example.
If you have borrowed £2,000, which became £2,700 with added interest and you had paid £2,300 so far, with a balance remaining of £400, if you win the complaint the balance is cleared and you get a cash refund of 2300-2000=300.
You can’t usually ask to have all the refund in cash and to be able to carry on repaying the balance.
Do I have to pay a reduced balance immediately?
A similar example but earlier in the loan so you have repaid less:
If you have borrowed £2,000, which became £2,700 with added interest and you have paid £800 so far. If you win the complaint the interest is removed and the balance is reduced to 2000-800=£1,200 so you only repay in total what you borrowed.
So do you have to repay the £1200 immediately? Or just carry on making the loan repayments? No. The creditor should accept an affordable offer of repayment from you and not add on any more interest or default that debt.
In practice this doesn’t seem to be a problem and creditors seem to be reasonable about this. For example, see this comment from someone whose lender was difficult all the way through the complaint but absolutely fine about reaching an agreement on repaying the debt when the case was upheld at the Ombudsman.
For overdrafts, banks will normally reduce your overdraft limit, sometimes removing it, after your balance is reduced. Again this doesn’t seem to be a problem and most people are very happy with the result.
Car finance – when you owe a balance and want to keep the car
Car finance can be complicated. You may still get a very good result from a complaint.
But if you still have the car and you are still paying, you must read about what happens if you win the complaint before making a claim.
Often you may want to delay making the complaint until you have repaid not the whole debt but the amount you borrowed.
What if the debt has been sold?
If you defaulted on the debt and it has been sold, you complain to the original lender because they made the poor decision to lend when it was unaffordable.
If you then win the claim, the lender will sort out the balance with the debt collector who has bought the debt. Sometimes the lender gets the debt back and sorts it out. Sometimes they leave it with the debt collector and get the balance corrected. It is up to the lender which they do.
Your credit record with the original lender and the debt collector should both be cleaned.
What has happened to other people complaining about….?
The best thing to do here is to look at the comments below the specific article for your type of debt:
But your case is individual. Just because one person got a good result or a straight rejection from a lender doesn’t mean you will.
And remember that many of these cases are being won at the Ombudsman. So if the debt caused you problems and you think the lender should have realised that was likely at the start, go to the Ombudsman if you get a rejection or a poor offer. Lenders are hoping you will give up!
Templates for affordability claims
Options when you cant pay bills & debts
Could a Debt Relief order help you?
steve says
hi Sarah,
I have made a complaint to below credit cards for affordability claim
Aqua
opened 2019
balance 1,169 balance not being chased and settled account with balance on credit file (experian) while others marked as £0
Vanquis
opened 2021
passed to third party, on credit file they have marked account as settled but no default from when it was transferred
Capita 1 X 2
opened 2017 & 2018 -both £300 limit
both cleared recently (2024)
Fluid
Open 2021
Cleared 2024
Zopa
agreed and upheld complaint compo paid and card closed down.
Apart from Zopa all others have declined the complaint due to time barred?
is it worth going to FOS
Sara (Debt Camel) says
I don’t understand what is happening with the Aqua card, have you settled this?
Capita – is this Capital One?
How did you clear the Fluid card?
Apart from the Cap One cards, none of those cards can be time barred – can you paste in the relevant part of what each rejections said? Use a separate reply for each card
Steve says
Hi Sara
We’ve rejected this complaint because it was made outside of the time limits for referral to the Financial Ombudsman Service (FOS), as set out by the Financial Conduct Authority*.
This is because it’s been raised more than six years from 28 February 2011, 11 December 2017 and 06 May 2018, when your accounts were opened with £200, £300 and £300 credit limits. Please note, the credit limit has never been extended on any of your accounts.
Your account xxxxx defaulted on 07 August 2013 and the balance of £334.30 was sold to Lowell, an external debt purchaser on 18 June 2014. Please give Lowell a call on xxxxx so they can share the available options to help you settle your balance. No idea about this one and no response at all third party
Your account xxxxxxx. was repaid in full and closed in June 2024.
Your account xxxxx was repaid in full and closed in June 2024.
You’ve also not given us an explanation or evidence that suggests this complaint has been made within three years of you becoming aware, you had cause to complain about the decisions to offer you credit.
As a result, we won’t be investigating this complaint any further.
Sara (Debt Camel) says
I can’t guess which lender that is as you don’t mention one lender having opened 3 accounts?
Steve says
This is Capital 1
Steve says
Hi Sara
Vanquis
Your account was opened on 21 April 2011, with an initial limit of £250.00. As this was over six years ago the information regarding your application is limited and I’m unable to review
the call in which the application was approved.
Additionally, our records show we weren’t ever in a position to increase the credit limit.
Our records show, due to arrears on your account, you were issued with a notice of default letter on 12 April 2012.
As this took place more than one year ago, I consider it to have provided reasonable awareness for you to complain at the time, in respect of our lending decision.
Taking the above into consideration, I’m sorry to inform you that we’re not in a position to review your complaint any further. Therefore, no credit file amendment or refund of interest or charges is due.
Outcome – Out of Jurisdiction
Date Borrowing Type Total Credit Limit Outcome
21/04/2011 Initial borrowing £250.00 Out Of Jurisdiction
The information I’ve reviewed has revealed our lending decisions took place more than six
years ago.
Sara (Debt Camel) says
ok, you had written “opened 2021” – that was a typo for 2012?
That case looks hopeless – it was defaulted much more than 6 years ago and the limit was low and hadn’t been increased. No point in wasting your time taking that to FOS.
Steve says
They have totally missed the complaint or looked at the account that was opened in 2021 and was passed to a third party in 2023. Will I need to go back to them?
Sara (Debt Camel) says
So there were 2 accounts? One opened in 2012 and one in 2021? And they have ignored the second? How large was the credit limit for the second account?
steve says
Vanquis balance is £1117.06 and yes this account from 2021
Sara (Debt Camel) says
yes go back to them and say you weren’t complaining about the old account but the one opened in 2021
Steve says
Hi Sara
Fluid was fully paid by salary due to increase in salary recently along with both Capital 1 x2
Can’t find Aqua letter, I will phone them on Monday but basically they said they won’t chase the money and account marked as settled. Only balance is showing on Experian the other credit agency is 0.
Ade says
Hi Sara,
I sent a complaint to NewDay about raising my credit limit when i was alredy maxing out my credit card using your complaint, they cme back very quickly wihin teo weeks saying that they believed i was provided my account responsibly
– credit application
-information from credit reference agencies
-other newday accounts
-internal data
They keep refering back to when i opened the account but the bulk of my complaint was about the further credit increases. They said there was no indication of financial difficulties but I was using up the limit everymonth and just paying the minimum payment just to use it again because i was so strapped for cash. Can i take this to the Financial ombudsman?
Sara (Debt Camel) says
Yes you can.
how much did they increase the limit?
Maria Jones says
Hi Sara. I wondered if you could help. I took out a credit card in 2019 whilst I was at uni. It was a “initial Barclaycard” (now forward Barclaycard) meant for credit building. I had £650 limit. I have proof of multiple fines for back then because I kept going over my limit and missing payments. Eventually it was increased, incrementally, but I think it was in line with my income increase. However, since then, the increases kept coming, but my income went down. I was consistently nearing my limit, but whenever I did, they increased it more. At one point they increased it by over £1000. They never once asked for income proof. The letter given at every increase asks the consumer to make them aware if financial circumstances have changed, but should that even be our job? Surely they should be doing the checks themselves. Also, based on the fact all I would ever pay is the minimum amount and I was consistently nearing my limit, should they have not taken this into account?
Anyway, now my limit is at almost £4000 and I’ve hit that. The interest is now as much, if not more, as my payments. I’m pretty mad at them for allowing these increases, although I take some responsibility. I have recently been diagnosed with ADHD which accounts for my impulsive spending, which I can now manage better with medication, but it just makes me more mad that Barclays kept allowing these increases.
I’m going to be putting in a complaint with them, but, do I have grounds?
Sara (Debt Camel) says
They should have taken the fact that you were only making minimum payments into account, so i think you should complain.
Do you have any other debts?
Gemma says
Hi,
I asked you for help regarding DMP vs IVA just over 18 months ago on the DMP vs IVA thread. We went with a DMP with Payplan and have approx 4 years remaining . It’s going well and I don’t want to “rock the boat” however I know that you mentioned about making affordability complaints, and if we were successful then this would help speed up our DMP.
Do I need to notify Payplan that I am making affordability complaints ? And is there any negative way this could impact the smooth running of our DMP ? Thank you
Sara (Debt Camel) says
Making complaints will not impact the DMP. I suggest you make them as soon as possible.
Connor D says
Hi
Do you think I have a chance of winning my affordability claim against TSB? Its with the Financial Ombudsman Service now who are investigating it.
Around 2015/2016 TSB gave me 2 loans, 1 of £7500 and 1 of £1500. Also gave me an overdraft limit of £3000 and a credit card with a limit of £1800. My monthly income was £1800 at the time and I had a gambling addiction which TSB should have known as my current account was with TSB. I ended up having to get a Debt payment plan set up with Stepchange to get my debts paid off.
Also do you think it would be worth claiming against RBS as they gave me a credit card around the same time? And also couple of other companies gave me loans too!
Thank you
Sara (Debt Camel) says
How long ago did the DMP start?
Connor D says
Debt plan started in 2018 and is now completed
Sara (Debt Camel) says
Do you have bank statements or other evidence about your financial situation in 2015/16?
John says
Hi Sara. i have Debenhams Credit card defaulted in 2024 but opened 04/2018. it was with debt collection agency all that time untill defaulted when i msised payment to the agency. I made an irresponsible lending complaint. will they consider or the FOS consider it as it was opened over 6 years ago but i did have heart attack and surgery in january 2024 so not sure if that helps.
Sara (Debt Camel) says
when did you first miss payments to this?
John says
First missed payment in september 2018 and from december 2018 it was with moorcrodt whom i was paying like £25 a month. When i stopped paying during i’ll health in early 2024 got a default in 2024.
Sara (Debt Camel) says
so from December 2018 you were only making low payments to this?
What is your current health situation? If you are unable to work it may be simpler to ask for a write off on health grounds
John says
Yes that is correct.
I am recovering and back at work part time instead of full time so far. But its defaulted as of 2024. Worth complaining to remove it? And is it better to pay it reg at regardless as im not sure settled debts are better than unsettled defaulted debts.
Newday has responded today saying as the account was opened more than 6 years ago they cannot look at the complain. But i could argue the fact i only became aware now as post covid i have been suffering ill health.
Sara (Debt Camel) says
Were you having health prblems before 2024?
john says
yes since 2020 health has been going down with no cause found until heart attack in early 2024 the cause was found to be blocked arteries.
also want to add, originally i though the account was defaulted already since 2019 because it was with Moorcroft and usage suspended and i couldn’t even access online account. only recently as i have started to recover i checked my credit file saw the default from 2024.
Sara (Debt Camel) says
It’s worth sending this to the Ombudsman then and explaining about your health
Danielle says
Hi Sara
Have done an affordability complaint with HSBC for 4 loans. The first loan was huge £21k when I was earning less than £17k per year. It started in around 2003 but I found it went on beyond the date April 2007 date around unfair relationships. The 2nd loan was around 2008. Then 2 loans from 2019 onwards.
HSBC are saying they don’t hold records for the older loans and that they don’t find the 2019 ones unaffordable. They sent me the information of all of the loans and a credit card so I don’t really understand this stance of we don’t have any documents relating to these. Is this just there way of saying you are out of time as these are old?
Is it worth referring it all to the ombudsman?
I raised them all in one complaint.
Sara (Debt Camel) says
do you have bank statements or other evidence about your finances in 2003 and 2008?
Obviously the two 2019 loans can be sent to the ombudsman
Danielle says
Hi Sara,
I have bank statements from around 2007. They definitely cover part of the £21k loan and then the new loan from 2008. I possibly also have payslips from 2003 would they help?
Sara (Debt Camel) says
So you can refer all these to the Ombudsman, but the chances are that as the 2003 and 2008 loans were settled before 2019, then the Ombudsman will say these are too old. (A loan has to either be settled in the last 6 years OR for part of a continuous chain of loans where the last one was settled within the last 6 years to be in time for the ombudsman to look at it. I don’t think that can apply to your older loans)
N says
Hi Sara,
I made an affordability complaint to Fernovo as I have had four loans in the past 18 months, total approx £1400 over the four loans. I currently have one outstanding loan with them for £300. I sent the template in to them as during the time of taking all four loans I was gambling heavily. I was using other payday loans to pay off Fernovo and then starting the cycle again when I was eligible to apply once it was cleared.
I have received a reply from them today with a long list of the systems they checked at the time and how I was in the “Green” for every check and they were confident that they were lending responsibly. I did send my bank statements to them during the complaint which showed numerous gambling transactions and other payday loans coming in and out.
Strangely, they have said this in their final response which I thought sounded dodgy-
“This complaint was partially upheld
However, because you always repaid in time all your loans before the last one, and you have decided to file for an affordability complaint, we are ready to reduce the interest on the last loan, if you withdraw your complaint, as a gesture of goodwill we are happy to reduce your balance by £258.30.
To provide you with an incentive to close the account as soon as possible, we are willing to completely delete all your accounts from your credit file, once the last one is repaid.
Enough for FOS to look at?
Thanks,
N
Sara (Debt Camel) says
How large were the loans in order you took them out?
Do you know how much interest you have paid for each of the first three loans?
How much have you paid so far to the current loan and what is the balance?
What other debts problems do you have – payday loans are normally a symptom of other debts as well
N says
So overall-
1st Loan- £400 (Repaid £580.64)
2nd Loan- £500 (Repaid £788.08)
3rd Loan- £300 (Repaid £457.16)
Final Loan- £300 (not made any payments yet as due date has not arrived- £45.60 interest due to be paid overall on this one.
Other debts- Mr Lender-£250 left, Lending Stream- £500 left, PayPal Credit £2000, Monzo Overdraft- £3000 (complained to them, currently waiting for reply), Jaja, Vanquis, Aqua-£3400 in total over three CC and Creation about £3500- made affordability complaints against all because I kept getting credit at a time where I was a gambling addict and using all my credit limit. Stopped gambling now, I’m managing payments and chipping away slowly. Thanks
Sara (Debt Camel) says
What were the gaps between these loans – time from repaying loan 1 to taking loan 2, etc?
“Final Loan- £300 (not made any payments yet as due date has not arrived- £45.60 interest due to be paid overall on this one.”
that sounds very little interest?
What are they proposing to reduce the balance to?
Lauren says
Hello, just wanted to message to say thank you, i used your template for a credit card affordability complaint and I’ve had it upheld and had a refund of £769.
Thank you 🙏
B Harvey says
Hi, I complained regarding a loan and they have agreed to refund all charges as a goodwill gesture which would clear the balance but aren’t upholding the complaint so won’t change the late payments on my credit file. If I take this further with the Financial Ombudsman in the hope they do uphold the complaint could I end up losing the offer completely if they don’t?
Sara (Debt Camel) says
Who is the lender? How large is the interest refund? What is the rest of your credit record like?