Hi guys, just want to say a massive thanks to everyone who's posted in this thread with advice on how to deal with this sort of situation.

o2 placed a default on my credit file November 2008 over what they claimed was £26 I owed them.

The short version of the story is that I cancelled my contract in November 2007, they then kept billing me for 5 months before I cancelled the direct debit and rang them again asking for my money back. They said I had agreed to transfer my number to a PAC code, when all I asked was to cancel the account.

They refused to refund me the 5 months line rental I'd paid for by direct debit without realising, even though the phone hadn't been switched on in that period. All went quiet and I didn't hear anything until I got denied a new mobile contract 4 weeks ago. I checked my report and yes, there was the default.

I emailed creditfilereferrals AT o2.com and started a dispute on the ICO website. Two weeks later (the time I gave them to give a response) and I've got what I think is a satisfactory response.

"Your email says that after you called in November 2007, you were of the belief that your account would be immediately disconnected. We’ve recently updated our process to accept disconnection requests by telephone, but this wasn’t the case in November 2007, when we required 30 days’ written notice of your request to end the agreement. All disconnection requests are subject to 30 days’ notice and this has always been the case. To that end, I consider it highly unlikely that the adviser would have intentionally led you to believe that the number would be disconnected with immediate effect, and I’m sorry if you misunderstood.

...

The notes on your account show that you contacted us in May 2008 to dispute the charges. Our response was clear and gave a full explanation as to why we did not agree with your reasons for disputing the balance. As such, we're not obliged to make any amendments to your credit file as you were aware of the charges and did not make a payment. However, I’ve amended your credit file, removing the default and instead showing that the account was disputed, which still constitutes an accurate portrayal of your account with us. In addition, I’ve credited the current balance of £26.61 as a gesture of goodwill. This will prompt a final update to your credit file to show that your account is settled.

The default removal from your credit file should be effective within 14 days. The account will show as settled and closed within 60 days."

o2 have always maintained that the operator would have read from the script and done things by the book, but have never been able to find notes to that effect. I know what was said in the phone call and it wasn't what they're claiming. Surely the burden is on them to prove that what I'm claiming isn't right, rather than me try and prove what I know was said? Maybe this is why they've removed the default as ultimately a court would rule in my favour?

So, default removed and the £26 wiped. Success! Is this everything I should be aiming for? Is there such a thing as a 'disputed' notice on a credit report, and will it show up as this? Is it a bad thing and should I continue fighting to have it removed? Is there any chance of me recouping the £125 in line rental I paid unsuspectingly if I was to take this to the small claims court like I have suggested?

Thanks again to everyone in this thread, I really appreciate the advice and help.

Once concluded, I'll be spreading the word about o2 and default notices. They can't be allowed this much power to screw people's credit files, especially when they don't even need to tell you they've done it.