Barclays mortgage customers face the “nightmare” of poor credit ratings | banks and building societies

B arclays has been accused of putting its mortgage customers through a "nightmare" by mistakenly recording defaults in their credit files, meaning they are trapped in expensive deals for home loans and other credit.

Guardian Money has spoken to a number of people who say Barclays repeatedly flagged them as not having made mortgage payments, even though they paid in full.

Others who took agreed payment vacations, said that their files without giving any reason or warning also fell into arrears.

The financial consequences of a reminder on your credit file can be devastating, making it harder to get a loan, a new credit card, or to switch your mortgage to a more favorable offer.

Lenders always check a potential customer's file and often withdraw offers if they find defaults. Keep the defaults on file for six years.

Despite being aware of the problems, which seem to mostly affect former customers of Woolwich, which Barclays acquired in 2000, staff were apparently unable to remove the notices.

The administrator errors seem to affect customers who have changed their mortgage terms in some way or even overpaid. In many cases, the bank has acknowledged that it is at fault and paid compensation of 300 pounds to the victims, but has not remedied the shortfalls, say those affected.

It has become especially relevant in recent weeks as households scramble to restructure their debt ahead of projected interest rate increases.

My problems go back to 2019, when I did a routine rate change after signing a new five-year contract

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

"The way Barclays treats customers in this situation is nothing short of scandalous," he says.

"My problems date back to 2019, when I went through a routine rate change after signing a new five-year contract. The administration of the bank has failed, so that the debits of three months have not been collected."

WB thought the matter had been resolved – he says the bank has admitted its error and paid compensation of £300 – but he has recently discovered that his credit file contains four defaults.

JN from Edinburgh has paid the mortgage every month without fail, but says Barclays told Experian it had missed three payments in the last six years. Photo: Rosemary Roberts/Alamy

"If it wasn't so serious, Barclays' response would be ridiculous," he says. "I have an offer for a new mortgage with another provider, but it can not be done until Barclays officially confirms that it is a mistake. If it is not resolved soon I will have to get a solicitor involved."

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

"My mortgage has been paid every month without error, but Barclays has told Experian that I have missed three payments in the last six years, ruining my credit rating," he says.

"What I find most extraordinary is that at no point did Barclays write to me or contact me about this – I only found out about it because I checked my file on the advice of my daughter. I wonder how many other mortgage holders are similarly affected, but have no idea that their file has payment defaults."

GW from Surrey is in a similar position to WB. Small business owner says he agreed to a six-month mortgage payment vacation last year because of Covid-19's closing. The disruption was agreed with the bank and should not have led to the default.

Since then, he says, he has not only resumed his monthly payments, but has overpaid to catch up on vacations. Still, the bank has 13 delinquencies recorded against his name, and he says he has no idea why.

"It's a nightmare. For this reason, I could not transfer my credit card balance to a cheaper offer," he says.

"There's little point in looking for the new mortgage we need with so many defaults – after all, who's going to touch our record with it? I really need Barclays to sort this out. Employees do not seem to know what they are doing. I have taken it to the ombudsman – but am getting nowhere."

Barclays disputes this, saying GW's agreed payment vacation was only three months instead of the six it claimed, leading to the defaults. It is said that the Financial Ombudsman Service will consider the case and will comply with the decision.

Concerned readers, all of whom asked not to be named, contacted Guardian Money after reading about the Norwich-based CS case, which had 11 defaults placed on its file by the bank – defaults that remained even after Barclays told us they had been placed because of a "rare error" there.

I can't take out a mortgage now and only a few credit card companies allow me to have a card

A reader who contacted us told us about a case from 2017 that she believes is still unresolved.

"My credit score is perfect – or would have been if Barclays hadn't put my 'mortgage defaults' on my credit file in 2017," HK wrote.

"I can't get a mortgage now, and only a few credit card companies allow me to have a card, and with a paltry limit of 1.800 pounds. The couple you wrote about is not alone."

A Barclays spokesperson says, "We take the responsibility of reporting accurate customer credit report data extremely seriously. As soon as we become aware of discrepancies, we will immediately work to review and remedy the situation.

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

"We are currently reviewing the remaining two active cases and will be proposing a solution to both customers shortly."

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