A reader asked if he has to pay a debt that he can’t see on his credit record.
Many people think that checking their credit record is a good way to get a complete list of their debts. And they look forward to a defaulted debt disappearing from their credit record after 6 years because then they don’t owe the money anymore.
Unfortunately neither of these myths is true!
What debts show on a credit file?
Your credit records are details about your borrowing and repayments over the last six years that are provided by some lenders.
Lenders want these records so they can make good decisions about future lending. They are more interested in recent data and they have agreed they don’t want to know about information from more than six years ago.
If you are paying a debt normally, it stays until you have repaid it fully leaving a zero balance then it drops off after six years. If a default has been marked on a debt, then the debt disappears after six years but the debt still legally exists – it has only gone because the problem was so long ago that future lenders don’t want to know about it anymore.
Most all commercial lenders such as banks and credit cards report data but sometimes they only report to one or two Credit Reference Agencies, not to all three: Experian, Equifax and TransUnion.
So what debts do you have to pay that aren’t on your credit report?
There are three common reasons why you have to pay a debt that’s not on your credit report.
Debts which are reported to a different credit reference agency
If you check your Credit Karma credit report, you will debts which are reported to TransUnion. But if you owe money to a lender who only reports to Experian and Equifax, that debt isn’t going to appear.
So the report from one of the CRAs that you are looking at is not a complete list of your debts.
If you get reports from all three CRAs (see The best way to check your credit records for how to do this without paying anything) that gives you more information but there may still be debts that you owe which aren’t on any of them.
Debts defaulted over 6 years ago but where you have made payments within 6 years
These debts will have dropped off your credit reports because the default was over 6 years ago.
If you hadn’t made a payment for more than 6 years, the debts may be unenforceable because they are statute-barred. See Questions about statute-barred debt for details and talk to National Debtline about your situation if you think one of your debts may be statute-barred.
But if you have made a payment within the last 6 years, the debt is not statute-barred and the creditor can still take you to court for a CCJ … so you need to pay them.
This often happens if you are in a long debt management plan. If you stop making payments to these debts or don’t talk to a debt collector who contacts you about the debt, you may get a CCJ which will reappear on your credit record and also bailiffs or other enforcement problems. In 2019 more than a million CCJs were registered.
However as the debts are old, you may be able to get a full and final settlement agreed.
And if the debts are very old, the debt collector may not be able to produce the right documentation. Here is a National Debtline factsheet that looks at this, with a template letter to ask the creditor to produce the CCA agreement. Note that you have to pay £1 for this. If the creditor can’t produce this, then the debt may not be enforceable in court – I suggest you discuss this with National Debtline and whether you can simply not pay the debt.
Creditors that don’t report to the credit reference agency
Some sorts of debt never show on any credit records: council tax arrears, magistrates court fines, parking tickets, benefit overpayments, what you owe a builder for work he has done, nursery school fees, a subscription etc. These are all legal debts even though they don’t show on your credit report.
What if you can’t afford to pay those debts?
So you can’t assume that if you are contacted about a debt that isn’t on your credit record you can ignore it.
Of course if you know the debt isn’t yours, because you have never taken out a payday loan or had a mobile from that provider say, then you should ask the debt collector to Prove It! as they have got the wrong person!
And you also can’t assume that a mortgage lender won’t be able to see debts that have dropped off your credit record. Mortgage lenders have other sources of information they can use.
It isn’t safe to ignore a debt because you can’t pay it. You can either try to come to an arrangement with the creditor or get advice on your full financial situation. The more debts that you have, or if you have any priority debts, the more important it is to get proper advice.
There is a range of good places that can help, depending on the sorts of debts and whether you would like phone or face to face advice.