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Barclays mortgage customers face ‘nightmare’ of poor credit ratings

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Barclays has been accused of putting its mortgage customers through a “nightmare” by wrongly recording defaults on their credit files, meaning they are trapped on high-cost deals for home loans and other borrowing.

Guardian Money has spoken to a number of people who say Barclays has repeatedly marked them down as having defaulted on their mortgage payments despite them having paid in full.

Others who took agreed payment holidays say they have also had defaults placed on their files without reason or warning.

The financial consequences of having a default on your credit file can be devastating because it becomes harder to get a loan, a new credit card, or to switch your mortgage to a cheaper deal.

Lenders always check a prospective customer’s file and will often withdraw offers if they see defaults. The defaults stay on file for six years.

Despite being aware of the problems, which appear to particularly affect former customers of Woolwich, which Barclays took over in 2000, staff have seemingly been unable to remove the references.

The admin errors appear to affect customers who have made a change to their mortgage terms in some way, or have even been overpaying. In many cases the bank has admitted it is at fault, and paid victims £300 compensation, but has failed to remove the defaults, say those affected.

It has become particularly pertinent in recent weeks, with households scrambling to remortgage ahead of predicted interest rate rises.

My problems go back to 2019 when I went through a routine rate change after signing a new five-year dealWB

WB, who lives in Clapham, south London, says the default placed on his buy-to-let mortgage by the bank are currently costing him about £115 a day as they have prevented him from moving the large loan he has on his home to a cheaper deal.

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“The way Barclays has treated customers in this situation is nothing short of scandalous,” he says.

“My problems go back to 2019 when I went through a routine rate change after signing a new five-year deal. The bank’s administration failed, meaning three months’ direct debits were not collected.”

WB thought the matter was resolved – he says the bank admitted its error and paid £300 compensation – but he recently discovered that there are four defaults on his credit file.

View image in fullscreenJN from Edinburgh has paid the mortgage each month without fail but says Barclays told Experian three payments were missed over the last six years. Photograph: Rosemary Roberts/Alamy

“If it wasn’t so serious, Barclay’s response would be laughable,” he says. “I have an offer of a new mortgage with another provider but it can’t go ahead until Barclays formally confirms it is an error. If it isn’t resolved soon I am going to have to get a lawyer involved.”

JN, from Edinburgh, contacted Guardian Money this week after a recent Experian credit check revealed that Barclays had posted three defaults on his file without warning.

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“Every month my mortgage has been paid without fail but Barclays has told Experian that I have missed three payments over the last six years, wrecking my credit score,” he says.

“What I find most extraordinary is that at no stage did Barclays write to me or contact me about this – I only found out because I checked my file on the advice of my daughter. I wonder how many other mortgage holders have been similarly affected but have no idea that they have defaults on their file.”

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GW, from Surrey, is in a similar position to WB. The small business owner says he agreed a six-month mortgage payment holiday last year because of the Covid-19 shutdown. The break was agreed with the bank and should not have prompted the default.

Since then, he says, he has not only resumed his monthly payments but has been overpaying to make up for the holiday. Despite this, the bank has registered 13 defaults against his name, and he says he has no idea why.

“It’s a nightmare. Due to them I have been unable to move my credit card balance to a cheaper deal,” he says.

“There is little point in looking for the new mortgage that we need with so many defaults – after all, who’s going to touch us with that on our record? I desperately need Barclays to sort this out. Staff don’t seem to know what they are doing. I have taken it to the ombudsman – but am getting nowhere.”

Barclays disputes this and says GW’s agreed payments holiday was only three months rather than the six he claims, prompting the defaults. It says the Financial Ombudsman Service is looking at the case and it will abide by the adjudication.

The affected readers, who all asked not to be named, contacted Guardian Money after reading about the case of CS from Norwich, who had 11 defaults placed on his file by the bank – defaults that remained even after Barclays told us that they had been placed because there because of a “rare error”.

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I now can’t get a mortgage, and only a couple of credit card companies will allow me to have a cardHK

One reader who contacted us told us about a case from 2017, which she says has still not been resolved.

“My credit score is perfect – or would be had Barclays not lodged my ‘mortgage nonpayments’ on my credit file in 2017,” HK wrote.

“I now can’t get a mortgage, and only a couple of credit card companies will allow me to have a card, and with a paltry limit of £1,800. The couple you wrote about are not alone.”

A Barclays spokesperson says: “We take the responsibility of reporting accurate data of customers’ credit reference information extremely seriously. As soon as we are alerted to any discrepancy we will work swiftly to review and resolve the situation.

“Of the recent individual cases brought to our attention, the majority have already been resolved and where errors were identified corrective action taken to ensure accurate reporting.

“We are currently reviewing the remaining two active cases and will shortly provide both customers with a resolution proposal.”

This article was amended on 15 November 2021 to remove references to “default notices”, which are distinct from defaults.