Article by Neil Greenhill - 26th April 2012

Unexpected Mobile Phone Defaults

We often hear from customers who are surprised to see a mobile phone default on their credit file - but why what are the reasons for these unexpected defaults?

Firstly, mobile phone companies do not send the usual default notice as is required for most credit providers under the Consumer Credit Act 1974 (CCA).

Despite reporting payment history monthly to the credit reference agencies – including late payments and defaults - mobile phone companies claim they are not covered by the CCA as the service they provide is not a credit product and therefore they are not required to follow the stringent regulations required on default. The agreement you have with your mobile phone company is not a CCA regulated agreement, it is a simple contract, and if you don’t pay on time, you are technically in default of your mobile phone contract. It’s that simple. There’s no legal requirement on mobile phone companies to issue a default notice in the form demanded by the CCA, as the CCA doesn’t apply.

Mobile phone companies often terminate an agreement simply because of payment default. This happens much sooner than you might expect, in contrast to financial providers who typically allow between 3 and 6 months of late payments before resorting to issuing a default notice and recording the default at a credit reference agency.

We also hear from customers who have taken out a mobile phone contract for a friend, relative or partner - and are unaware the contract hasn't been paid.

Sometimes customers may not have noticed that payments have failed, for instance due to a mistake when setting up a direct debit, and have therefore innocently stumbled into a default. Missed payments may have been noticed in some cases, but it had not been appreciated that a much more serious default has been recorded at the credit reference agencies.

And this comes back to the start of this article - we often hear from customers who have been turned down when applying for credit - only to find they have an unexpected mobile phone default when they check their credit file.

To avoid any potential embarrassment and to know where you stand, we recommend that you apply for a copy of your report before making any new credit application. With checkmyfile it’s free to trial our subscription service for the first 30 days and then costs a very affordable £14.99 per month until you cancel, which you can do at any time. For just £14.99 you can have the most comprehensive credit report available in the UK, containing more than twice the information than any other credit report, and including free identity theft protection and credit scores at no extra cost.

Our Credit Analysts are best placed to help you understand your credit report and help to provide advice with any unexpected errors or entries. Please feel free to contact them by email, through our secure message centre on the website or by calling our Freephone number.

With a copy of your report in hand you can be more confident when you come to make any new credit application.

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