Make Your Notice Of Correction Pay!

nco credit file picture

The 1st UK has got a new mortgage lender, not featured on the main comparison sites who are much more willing to lend – at a competitive rate, for people who have completed a notice of correction.

The lender will do owner-occupier mortgages, buy-to-let mortgages and limited company buy-to-let mortgages. They lend against residential property only – no commercial property or mixed-use titles.

Many lenders simply ignore your well-chosen 200 words because they have not done the work to find out how it changes the risk profile of the mortgage.

Obviously, the amount of poor credit evidence in your file and how recent it is still impact their willingness to give you a good rate. For example, if you got a default very recently for a relatively large amount of money, they might not be particularly sympathetic.

For older credit entries, however, this lender may be willing to look the other way.

Due to interest rates being very low or in some cases, negative, lenders are forced to take on sensible amounts of risk to get some interest on their money.

This lender offers:

  1. Purchases and Remortgages
  2. 2-year, 3-year, and 5-year fixed-rate deals. Plus, a discounted variable rate offering
  3. Low APR rates not far from the fussy prime high street banks
  4. No product fee, no lender fee, no broker fee, no booking fee, and no completion fee
  5. Low-cost automated house valuation
  6. Repayment or Interest Only payments
The abbreviation NOC stands for Notice of Correction. The Consumer Credit Act 1974 (CCA) requires that the entries on your credit files be accurate to represent a factual account of your credit history.

If you feel there are entries on your credit files that could be misleading lenders, you have a right to request the credit referencing agencies apply a Notice of Correction to any entry you feel may be misleading to potential lenders.

Excerpt from the CCA 1974

“Under section 159 of the CCA 1974, if any of the information held is incorrect the agencies can be asked to remove or amend it, or to add to their records a “notice of correction”. A notice of correction is simply a statement of up to 200 words written by the individual, which gives a clear explanation of why he considers the entry to be incorrect. If the agency amends the file or adds a notice of correction, it must also send the details to any lender who has consulted the file in the previous six months, and to those who do so in the future.”

~ (Briefing Paper on Credit Reference Agencies)

Notice Of Correction Example

This is a notice of correction example which could help you repair some damage to your credit history. If you can save up £15,000, you could consider 15000 houses for sale Horden as they are cheap enough to buy without a mortgage.

The wording of the Act can lead you to believe that NCOs are only applicable to errors recorded on your file. This is not the case as the purpose of a Notice of Correction is to give consumers a chance to explain the situation.

Inaccurate entries must be removed or amended by the credit reference agencies. When the information is factual, a NCO gives a sort of recourse to have your file amended to reflect the situation that resulted in whatever entry is on your file that you feel to be a misrepresentation of your credit history.

Of note here is that an NCO is only really going to be beneficial to those with only a single negative entry, or a small period of time on their credit report with multiple negative entries. This could be a result of a previous employer going out of business, or an accident that left you unable to work for a period of time, resulting in lost income, or perhaps a delay in sick-related benefits being paid either by your employer or by the State.

What an NCO will not be useful for is simply using it to insert excuses across multiple entries.

It’s a method that can be used when there’s been extenuating circumstances.

Extenuating circumstances are those that are outside of your control. Things like illnesses that aren’t a minor illness or a family bereavement. Those are extenuating circumstances that if applicable to the dates of entries on your credit file, may be worth adding a notice of correction to explain to lenders the situation you were in.

Extenuating circumstances are not mediocre excuses!

A Notice of Correction should not be used to record just any excuse for a failure to pay. This isn’t the intended purpose, so things like…

  • My wife handles bills and was away on a business trip, resulting in late payment
  • The payment was only late by one day
  • I didn’t receive a reminder notice
  • Failure to pay the penalty disputed

Those won’t do you any good.

Here’s why…

Lenders must read NCOs before making a decision

In the paragraph earlier concerning the excerpt of the CCA 1974, it states that previous lenders to have viewed your credit file within six months of the NCO being added must view and consider the Notice of Correction. This applies to future lenders to view your credit file too.

What this will also do is eliminate all your credit applications from automated credit scoring processes, the reason being that it’s impossible for an automated process to evaluate the contents of a Notice of Correction.

Instead, the credit application must be manually reviewed. This will cause all your credit applications to take longer.

“Credit scoring models are used during the loan approval process to predict the likelihood of borrower delinquency. Online lending banks receive thousands of loan applications per day, and use automated assessments to approve or reject them in real time.” ~

When you consider that thousands of loan applications are made every day, you also have to consider the decision-maker of any application you’re making.

Once an application has been credit-scored, it’s usually then that someone will manually review the application. By applying an NCO to your credit file, you’re effectively bypassing the automated credit scoring, ensuring that someone at the company reviews your application manually. As you can expect, the decision-maker, they’re not going to be impressed if your entry simply states “Payment late by only one day”. Especially if without that entry, the credit scoring system would’ve prevented your application from reaching the manual review stage, thus saving them time.

A wise approach to using an NCO is to consider if what you have entered into your credit file is likely to alter the opinion of the decision-maker.

For example…

A creditor has added a note to your credit file indicating an account in default. This could be a default of your contract with the company and not specific to default on your payments.

It may be that you’ve agreed to a contract but afterwards realised that you’d inadvertently added a high-interest insurance premium, which you hadn’t realised when you signed and agreed to the contract terms. After learning of the additional cost, the account was settled and the contract was cancelled without paying for the remainder of the insurance premiums.

In such a case, an NCO could be used to provide lenders with a factual notice of correction.

Example NCO for the above scenario

This account is and was satisfied. An insurance cancellation was not settled due to a misunderstanding of the contract terms. This is a contract default due to a misunderstanding of the Terms and Conditions and not a payment default.

You have 200 words maximum to present your situation to potential lenders. In the above situation, the NCO would make it clear to the reviewer what the reason for the default is. It’s beneficial to them as they can now understand that the default is not a payment default but instead a contractual default due to a misunderstanding of the small print.

What you record using an NCO has to be read by a manual review of your application for any credit. The creditor should take it into consideration, but they aren’t obliged to do so. The only true way for an NCO to be effective is for it to be appealing to the decision-maker and not read as a simple excuse. Especially considering that they may not be impressed by the fact you’ve bypassed the automated process.

The information on your credit file doesn’t need to be wrong for you to add a Notice of Correction to it. If you feel there’s information that could mislead lenders recorded on your credit file, a “Notice of Correction” can be used to explain your situation.

To find out How to Add a Notice of Corrections, please refer to the individual help pages of the three UK credit reference agencies.

The same NCO should be provided to all three credit reference agencies to ensure it’s applied to all credit files and not just one agency.

Homeowner Loans in the UK

The world of finance is ever-evolving, and homeowners in the UK have a plethora of options to tap into their property’s equity, adjust their mortgage terms, or find a loan that suits their retirement needs. The most prominent choices available are homeowner loans, RIO mortgages, and retirement interest-only mortgages. This guide delves into these options, helping potential borrowers make informed decisions.

Fixed Rate Homeowner Loan

Homeowners looking for stability in their repayment schedule might be intrigued by fixed-interest-rate loans. These loans offer a predetermined interest rate that does not change over a set period, ensuring borrowers know exactly what they owe each month. This can be particularly useful for budgeting purposes. The fixed interest rate loans can be an excellent choice for those who wish to avoid the unpredictability that comes with variable-rate loans.

Re-Mortgage Rates

When it comes to remortgaging, the UK market offers a variety of options. The best remortgage rates 5-year fixed offer homeowners the chance to lock in a favourable rate for a considerable period, providing both stability and potential savings. For those who foresee a stable financial future and wish to capitalize on current low rates, checking out the best remortgage rates 5-year fixed might be a wise move.

Mortgages For those over 70

Age should not be a barrier to securing a mortgage or remortgaging an existing property. There are specific products tailored for those aged 70 and above. These over 70 mortgages are structured to accommodate the unique financial and life circumstances older borrowers face. If you’re in this age bracket and are looking to remortgage, the over-70 mortgages could be a suitable option.

United Trust Bank Second Mortgage

In some situations, homeowners might need additional financing but might not want to remortgage their primary home loan. This is where a joint second mortgage can come in handy. United Trust Bank offers a compelling product in this space. Their United Trust Bank secured loan can provide the additional funding homeowners might require, be it for home improvements, consolidating debts, or any other need. More details can be gleaned from the United Trust Bank secured loan page.

Mortgage For Over 60

Just like their counterparts aged 70 and above, those in their 60s also have specialized mortgage options tailored to their needs. Whether you’re approaching retirement or are already there, the mortgage for over 70 products caters to those who might have different income sources or a reduced income compared to their working years. For a comprehensive understanding of what’s on offer, potential borrowers can visit the mortgage for over 70 pages.

Equity Release For Under 55

Equity release schemes are not just for the older generation. There are options available for those under 55 as well. If you’re wondering, “Can I release equity from my home under 55?”, the answer is yes. Such schemes can offer a way for younger homeowners to tap into the value of their property without selling it. The specifics of how this works and the benefits it can provide can be explored further at the Can I release equity from my house under 55 link.

RIO Mortgages and Retirement Interest Only Mortgages

RIO mortgages, or Retirement Interest-only mortgages, are a unique product catering to retirees. These mortgages allow the borrower to pay only the interest on the loan, with the principal amount being repaid when the property is sold, usually upon the borrower’s death or moving into long-term care. They provide an avenue for retirees to release equity from their homes without needing monthly capital repayments, thereby offering a potentially more manageable financial commitment during retirement.

There are several advantages to this type of mortgage. Firstly, the monthly payments are often lower than traditional mortgages since you only cover the interest. Secondly, RIO mortgages can be a way to manage inheritance tax planning, as the loan reduces the estate’s value. Lastly, switching to an RIO mortgage can be a solution for those with an interest-only mortgage maturing without a clear repayment strategy.

However, it’s crucial to approach RIO mortgages with a full understanding of their implications. Since the capital is repaid from the property’s sale, it might affect any inheritance you wish to leave behind. Additionally, the eligibility criteria can be stricter, with lenders assessing the borrower’s income and ensuring they can meet the interest payments throughout retirement.

Navigating the Mortgage Landscape

The UK’s mortgage landscape is vast and varied. From fixed-rate homeowner loans to specialized products for older borrowers, there’s something to cater to almost every need. For homeowners, understanding these options is crucial. Whether you’re looking to remortgage, tap into your property’s equity, or find a loan suitable for retirement, thorough research and consultation with financial professionals can ensure you make a decision that’s in your best financial interest.

NCO help pages:

Related Reading