PRAAD explains how lenders should report arrears, arrangements and defaults so credit files give a fair picture of what actually happened.
The Principles for the Reporting of Arrears, Arrangements and Defaults at Credit Reference Agencies are industry principles developed through the credit-data sharing framework with ICO involvement. They are not the Consumer Credit Act, but they are important evidence of expected credit-reporting practice and are frequently considered in complaints about default timing and status reporting.
The central idea is accuracy and consistency: the credit record should reliably reflect the customer’s credit standing and the true state of the relationship.
Key points
- PRAAD distinguishes arrears, arrangements and defaults rather than treating every missed payment the same.
- A default generally indicates the relationship has broken down.
- The principles say the lender should notify the customer of an intention to register a default at least 28 days before doing so.
- PRAAD does not turn a telecom service into a CCA-regulated credit agreement; keep the frameworks separate.
Arrears, arrangements and defaults are different statuses
Arrears reporting records missed or short payments while an account remains active. An arrangement may show that alternative payments were agreed. A default is a more serious marker indicating the normal relationship has broken down. The correct marker depends on the real payment history and any agreement reached with the customer.
The 28-day intention-to-file principle
PRAAD states that a lender must have notified the customer of its intention to register a default at least 28 days beforehand, to provide time to make an acceptable payment or reach an arrangement. This is an industry credit-reporting notification principle. It should not be described as the statutory CCA section 87 notice unless the facts actually involve one.
Timing: three to six months is a guide, not an automatic formula
PRAAD describes default as something that may occur around three months in arrears and normally by around six months, depending on circumstances. Maintained arrangements, insolvency, disputes and account-specific events can alter the analysis. The aim is that the recorded history gives an accurate picture, including the point at which the relationship actually broke down.
Why framework mismatch matters
A complaint can fail if the organisation answers the wrong question. “We did not need to send a CCA default notice” does not answer a separate allegation that the PRAAD intention-to-file process was not followed. Conversely, PRAAD does not itself create CCA enforcement rights. Map each allegation to its own framework.
In practice
- Build a month-by-month table: contractual payment, amount paid, arrears, arrangement, notices and CRA status.
- Ask the creditor to identify the reporting principle it applied and the date it says notice of intention to register default was given.
- Compare any final response with the actual evidence; a response that only discusses CCA notices may not answer a PRAAD complaint.
What to do
A practical next-step plan
- Download the CRA entry and note the reported default date.
- Obtain payment history and any arrangement records.
- Locate all arrears/default-warning correspondence.
- Identify whether your complaint concerns CCA enforcement, PRAAD credit reporting, data accuracy, or more than one of these.
- Ask the lender to show when and how it notified you of its intention to register the default.
- Escalate an unresolved eligible financial complaint to FOS and/or data-accuracy issue to the ICO as appropriate.
Common traps
Things that often confuse the issue
- PRAAD is not a statute, but that does not make it irrelevant; it can be important industry practice.
- Do not describe the 28-day PRAAD notification as a section 87 CCA notice.
- Do not assume a default must be removed merely because collections activity was paused; examine the true account status.
Evidence worth keeping
Official sources
Check the rules behind this guide
These are official or primary sources for this topic. Rules, scheme terms and deadlines can change, so check the live source before relying on a formal time limit or procedure.