I had a credit card with a local bank from 2007 to 2010. In the middle of 2010, I decided to close the card and made the final payment on it.
In May 2019, I learnt through the Al Etihad Credit Bureau that there was an outstanding balance against 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 repeated attempts to reach out to the bank, a representative from its collections department called me and said that according to their records, the card was never closed and this amount was pending from that time.
I asked them why I was not contacted before they added the default against my name with the AECB and their response was that they tried but could not reach me.
I agree that I changed my phone number in 2011, but that means they did not try immediately after I closed the card.
I am also unable to find the clearance letter they gave me 10 years ago to confirm the credit card had been closed and nothing was owed on it.
The bank asked me to pay the Dh3,404 immediately, which I did on April 19, and I collected a clearance letter on April 27.
However, my name is still tarnished. What should be my next step be to get the AECB default status reversed against my credit score? GP, Dubai
Debt panellist 1: Steve Cronin, founder of DeadSimpleSaving.com
The arrival of the AECB has shone a light on the data kept by banks and utilities companies. Any mistake would become very noticeable when the person checked their credit score.
Mergers and system upgrades over time can complicate matters, with old records of numbers, customer letters and actions becoming lost.
Old cards that were not a priority for a bank or customer could thus re-emerge, zombie-like, to bite you when the credit score system made them important again. This default will stay on your credit score for five years.
The biggest issue you will face is your lack of a clearance letter from 2010. Do you at least have a card and/or bank account statement from that time, showing you made the final payment?
We should all learn from this and follow best practice to ensure that clearance letters from banks are stored in a safe place:
- Make sure you get a clearance letter whenever you close a credit card, loan or account.
- Adopt the mindset that this closure could be disputed in the years to come.
- Keep physical and electronic copies for decades as important documents. It is not that hard to create a file to store such documents. If you don’t store them together, I guarantee they will be lost.
You are lucky the amount on the card was small enough to be an annoyance rather than a disaster.
It would have been hard to get the amount waived. Ideally, you would have asked the bank in April to reverse the default as a condition of you paying the debt off. Now there is not much reason for them to do anything for you.
Raise a data correction request on AECB's website and follow up after 10 working days if you don’t hear anything. Once you have submitted your request, you should call or visit your bank, make them aware that you have submitted the AECB request and insist that they remove the default.
If the bank refuses to approve the data correction, then you can appeal to the AECB by calling them on 800 287 328.
Be prepared to not make much progress with your bank and have your borrowing restricted as a result. Ensure this bank is not your only bank in the country in case the relationship deteriorates further.
Debt panellist 2: R Sivaram, executive vice president and head of retail banking products at Emirates NBD
I would recommend that you reach out to a senior officer at the bank and share full details of the case, including the fact that until February 2019 the card you are referring to was not reflected in your credit report.
In addition, you could approach AECB and explain your situation to them. Given that they would have history of your credit performance over time, they could potentially help you resolve this with your bank.
The AECB report from February 2019 may help you in your discussion with the bank and the bureau.
In the future, it is important that you retain all important correspondence with your bank, including clearance letters.
The best solution would be to try to work with the bank and AECB to clarify to all concerned parties what actually happened.
I hope this will clear your name and if the balance was unfairly collected from you, it should be refunded.
Debt panellist 3: Carol Glynn, founder of Conscious Finance Coaching
This must be a very frustrating situation to be in. Have you visited your branch in person and spoken to a senior bank official? It is always more fruitful than phone calls.
If you received a clearance letter from the bank when you closed the credit card, you could consider lodging a complaint with the Central Bank of the UAE. However, your case will be weakened as you have no written proof from the bank that the card was closed and all dues were paid.
If you decide to submit a complaint, provide all documentation you do have, such as details of conversations and any other relevant information.
You are required to first lodge a formal complaint with your bank in writing (the bank will have its complaints 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 their records are updated to reflect the fact you cancelled the card.
If you have not come to a satisfactory conclusion after 30 days, you can then raise your complaint with the central bank.
It will also be difficult to have your default status reversed on your credit score as to do this you would need confirmation from the bank that the information they provided to AECB was incorrect.
You may not be able to reverse your credit history but you can improve it by ensuring that you pay all your dues and bills on time and in full.
If you do this diligently, you will see an improvement in your score but it may take at least a year to see a material difference.
This is an important lesson in ensuring we keep up to date with our credit reports as this situation occurs more frequently than you may expect.
The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to email@example.com