‘How can I override the default status of my credit file?’

RELATED: Why Is Having a Good Credit Score Important?

I had a credit card with a local bank from 2007 to 2010. In mid 2010 I decided to close the card and make the final payment there.

In May 2019, I learned through Al Etihad’s credit bureau that there was an outstanding balance in my name for Dh3,404 ($926.88) and my status was in default. This came as a shock to me because in February 2019 when I accessed my credit report there was no mention of this.

After several attempts to contact the bank, a representative from their collections department called me and told me that according to their records, the card had never been closed and that amount had been pending since that time.

I asked them why I hadn’t been contacted before they added the default to my name with the AECB and their response was that they tried but couldn’t reach me.

I agree that I changed my phone number in 2011, but that means they didn’t try immediately after closing the card.

I am also unable to find the authorization letter they gave me 10 years ago confirming that the credit card had been closed and nothing was owed.

The bank asked me to pay the Dh3,404 immediately, which I did on April 19, and I got an authorization letter back on April 27.

However, my name is still tarnished. What should be my next step to have the AECB default status reversed to my credit score? GP, Dubai

Debt 1 panelist: Steve Cronin, founder of DeadSimpleSaving.com

The arrival of the AECB has brought to light the data kept by banks and utility companies. Any errors would become very noticeable when the person checked their credit score.

Mergers and system upgrades over time can complicate matters, with the loss of old records of numbers, customer letters, and actions.

Old cards that weren’t a priority for a bank or customer could thus reappear, like zombies, to bite you when the credit scoring system makes them important again. This default will remain on your credit score for five years.

The biggest problem you will face is your lack of an authorization letter from 2010. Do you have at least one card and/or bank account statement from that time showing that you made the final payment?

We should all learn from this and follow best practices to ensure bank clearance letters are stored in a safe place:

  1. Make sure you get an authorization letter each time you close a credit card, loan, or account.
  2. Adopt the mindset that this closure could be challenged in the years to come.
  3. Preserve physical and electronic copies for decades as important documents. It is not so difficult to create a file to store such documents. If you don’t store them together I guarantee they will be lost.

You’re lucky the amount on the card is small enough to be an annoyance rather than a disaster.

It would have been difficult to get the exempt amount. Ideally, you would have asked the bank in April to cancel the default as a condition for you to repay the debt. Now there’s really no reason for them to do anything for you.

File a data correction request on the AECB website and follow up after 10 business days if you hear nothing. Once you have submitted your request, you should call or visit your bank, let them know that you have submitted the AECB request and insist that they remove the defect.

If the bank refuses to approve the data correction, you can appeal to the AELC by calling them at 800 287 328.

Be prepared to not make much headway with your bank and limit your borrowing accordingly. Make sure this bank is not your only bank in the country in case the relationship deteriorates further.

Debt Speaker 2: R Sivaram, Executive Vice President and Head of Retail Banking Products at Emirates NBD

I recommend you contact a senior bank official and share all the details of the case, including the fact that until February 2019 the card you are referring to did not appear on your credit report.

In addition, you could approach the AECB and explain your situation to them. Since they would have your credit performance history over time, they could potentially help you resolve this issue with your bank.

File a data correction request on the AECB website and follow up after 10 business days if you hear nothing

Steve Cronin, founder of DeadSimpleSaving.com

The February 2019 AECB report can help you in your discussion with the bank and the office.

Going forward, it is important that you keep all important correspondence with your bank, including authorization letters.

The best solution would be to try to work with the bank and the AECB to clarify to all parties involved what really happened.

Hope this clears your name and if the balance was unfairly collected from you it should be refunded.

Debt 3 Panelist: Carol Glynn, Founder of Conscious Finance Coaching

It must be a very frustrating situation. Have you visited your branch in person and spoken to a senior bank official? It’s always more successful than phone calls.

If you received an authorization letter from the bank when you closed the credit card, you may consider filing a complaint with the UAE Central Bank. However, your case will be jeopardized because you have no written proof from the bank that the card has been closed and all dues have been paid.

If you decide to file a complaint, provide all the documents you have, such as details of the conversations and any other relevant information.

You must first file a formal complaint in writing with your bank (the bank will have their complaint email listed on the website) and wait 30 days.

As part of your complaint, you should request that the Dh3,404 you recently paid be reversed and that their records be updated to reflect that you canceled the card.

If you have not reached a satisfactory conclusion after 30 days, then you can file a complaint with the central bank.

It will also be difficult to reverse your default status on your credit score, as to do so you would need confirmation from the bank that the information they provided to the AECB was incorrect.

You may not be able to reverse your credit history, but you can improve it by making sure you pay all your dues and bills on time and in full.

If you do it diligently, you will see an improvement in your score, but it may take at least a year to see a significant difference.

This is an important lesson in making sure we stay up to date with our credit reports, because this situation happens more frequently than you might think.

The Debt Panel is a weekly column to help readers manage their debts more effectively. If you have a question for the panel, write to [email protected]

Updated: May 19, 2022, 06:03

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