An open BT account left a mark on my credit file and I can’t get a mortgage

By Liam On Apr 6, 2023

I am buying a house and have had a formal mortgage offer from Barclays. I expect to exchange and finalize the property in a few weeks.

However, when mortgage rates fell, my broker applied to convert the loan offer into a cheaper deal.

Barclays performed a credit check which identified recent red marks from BT. It said that meant it could no longer proceed with the request for a new rate or the original offer, and I was left in the dark.

When I moved out of my previous premises the BT account was not properly closed and seven months after I left the house it sent me a bill. However, since I no longer lived in the property, I didn’t know there was a problem.

When I contacted BT customer service they said they would rectify my credit file but it could take up to 6 weeks to resolve.

A markup on your credit report will limit your access to borrowing and may affect a process such as a mortgage application

However, I have to cash in by the end of the month and there is little chance that I will be able to reapply with another lender in time.

I made my first mortgage application in October 2022 and at that time my credit file showed no negative points.

I am a single mother of four children and am currently in a position where I am going to lose everything.

I don’t understand how I can be in this position because of a mis-sent £40 bill. Please help.

Fran Ivens from This is Money replies: The past six months have been a volatile time for mortgage rates. Since the fallout from the mini-budget in September, when interest rates shot to record highs, borrowers and brokers have been watching the market closely to make sure they don’t miss out on a drop in costs.

And while they fluctuated and flirted with rates close to 3.5 percent, fixed rates now seem to have stabilized around 4 percent.

If you first signed up with Barclays in October, it makes sense that you’d want to move your loan to a different rate before finalizing it to take advantage of the steady drop in prices we’ve seen since the start of the year.

According to Moneyfacts, the average fixed rate peaked in October at 6.65 for a five-year fix and 6.52 for a two-year fix. They have now dropped to 5.35 percent and 5.04 percent respectively.

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Most lenders allow borrowers to switch to a new rate before completing the mortgage application with just an additional credit check, rather than submitting another full application.

However, this is where you ran into problems. The open BT account left you with an unpaid bill and therefore a grade on your credit score. And since you had left the premises, you weren’t aware of the problem and couldn’t fix it before it was too late.

At this point I should add that the BT rep I spoke to said he had removed the mark as a gesture of goodwill but did not admit any wrongdoing regarding the open account.

It says money was owed due to a missing “smart-hub” internet router that was not returned and tried to contact you several times about the problem.

The good news is that BT is working on correcting your credit record. But as you say, this can be a lengthy process and you don’t have time left before you need to complete your home purchase and exchange on the property.

You have tried to talk to Barclays but have been told that the case is closed and you must reapply to get a new loan.

And although your mortgage broker has sent evidence from BT that it’s fixing the file, he hasn’t heard from them.

I contacted Barclays on your behalf and asked if they could review your case in light of the circumstances.

I am happy to say that they have reviewed the situation and are now proceeding with a mortgage offer for you at the lower rate so that you can trade the new home for you and your children.

That says a spokesman for Barclays: ‘After a product change request to a lower interest rate, it was necessary to review the customer’s creditworthiness.

‘Information that would not previously have been seen in the credit file led to a further assessment of the application. We are pleased to confirm that, following confirmation of the negative information, we can proceed with the mortgage offer.”

The lender said it encourages customers who may be considering a large financial obligation to review their credit files to make sure they are accurate. Any inconsistencies or errors should be identified and discussed with the relevant parties.

Fran Ivens adds: This is a great result and I’m sorry for the stress you’ve had to endure while waiting for a fix.

I hope you have a successful move and that you and your children are very happy in your new home.

What to do if you need a mortgage

Borrowers who need to find a mortgage because their current fixed-rate contract is about to expire, or because they have agreed on a home purchase, should explore their options as soon as possible.

This is Money’s best mortgage interest calculator powered by L&C that can show you deals that match your mortgage and property value

What if I have to borrow again?

Borrowers should compare rates and speak with a mortgage broker and be prepared to trade to secure a rate.

Anyone with a fixed-rate deal expiring in the next six to nine months should research how much it would cost them to re-mortgage now — and consider getting a new deal.

Most mortgage agreements allow fees to be added to the loan and are not charged until it is closed. By doing this, borrowers can secure a rate without paying expensive arrangement fees.

What if I buy a house?

Those with an agreed home purchase should also aim to secure rates as soon as possible so they know exactly what their monthly payments will be.

Homebuyers should be careful not to overextend themselves and be prepared for the possibility that house prices could fall from their current highs, due to higher mortgage rates limiting people’s borrowing capacity.

Compare mortgage payments

The best way to compare mortgage rates and find the right deal for you is to talk to a good real estate agent.

You can use our best mortgage interest calculator to display deals that match your home value, mortgage size, term and fixed interest needs.

However, bear in mind that rates can change quickly, so if you need a mortgage it’s advice to compare rates and then speak to an estate agent as soon as possible so they can help you find the right one mortgage for you.

> Check out the best fixed rate mortgages you can apply for

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