Don’t end up paying the price of your principles

Simon Gray, of Credo Assest Finance, says beware the hidden cost of having your day in court.

There are still people in this country with principles, and some principled people believe in justice and having their day in court to right a wrong. For many it’s part of their make-up and beliefs.

But sometimes we don’t consider the real costs of this and I argue that the small cost of eating humble pie and biting your tongue can be a small price to pay compared with the alternatives when it comes to finance.

At Credo we see many credit searches where people have stopped paying for credit while they argue the right and wrongs with the provider, or have a county court judgment (CCJ) recorded because of a true dispute where a judge has presided over a decision of fault. Credit search data includes bank and building society current accounts, mortgages, personal loans, HP, credit and store cards, mobile phone bills and even utility bill accounts. These disputed payments show up as late payments or in the event of serious arrears, a default or even a recorded CCJ.

Say, for example, your mobile phone provider bills you for something you disagree with. After several frustrating phone calls you cancel your direct debit so it can’t take any more disputed money. This may result, in time, in a default recorded for a fairly insignificant sum, typically around £100. That default, despite the rights and wrongs, will mean you are unlikely to be approved for credit by prime lenders and you paying more for future credit. That default doesn’t automatically disappear once sorted and can remain on your credit file for years, affecting the rates you are charged for all credit going forward.

The cost of a personal loan or car loan will typically rise from say 5.9% to 9.9% APR – it may be even higher or refused. The monetary penalty on a four-year repayment for a £7,500 loan would be £600.

So the advice is to protect your credit file above all else. The effects of disputes and arrangements where you stop or adjust the amount you pay can be much more than the disputed amount, and will continue to have costs each time you borrow and may even result in credit being refused.

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Credo Asset Finance, is at 85 Yarmouth Road, Norwich, NR7 0HF. Phone 01603 703180, email or visit

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