Credit Report

Have a Default on Credit Report? Help is here!

If you don’t make your credit card or loan payments on time, you could get a default on Credit Report which will impact your score. Here’s what else you should know about defaults.

The Consumer Credit Act is an important law that covers most commercial lending in the UK. It sets out what creditors must do when they lend money and when they collect it.

When you borrow money, take on a mortgage, mobile phone plan, payday loans, credit card debt or any other credit agreement you must make monthly payments. If you don’t pay your bills on time, your credit score will suffer.

Defaults reduce your score and future credit prospects, therefore they should be addressed promptly. We’ll tell you what a default is, where they come from, how long they stay on your report, and how to get them removed.

What is a default?

A default on a debt occurs when you are consistently missing payments to your creditors. Lenders close your account because you owe them money and they don’t think you are good for the debt. This will have a negative impact on your credit file. If you miss many payments it may be passed to a debt collection agency.

Most lenders won’t consider a default unless you’ve missed payments over a period of time. Debt charity Step Change claims that three to six months is typical, however, this can be determined by the provider’s conditions.

A default notice is sent by some lenders to notify you that your account will be closed. You have at least two weeks after receiving this letter to pay off your debt. If you do, the default notice will not appear on your credit report. You can propose a payment plan, but the lender does not have to accept it. This will still also show on your credit history.

The sooner you can clear your debt after receiving a default notice, the better. If you’re struggling to handle your problem debt, give us a call at 0800 169 1536 and we’ll help you sort it out.

Will a default make my credit score go down?

Yes, a default will almost certainly damage your credit report and score. It might be more challenging to obtain credit in the future as a result of this.

How long does a default stay on your credit file? 

A default notice remains on your credit report for six years after the date it was issued, even if you pay off the debt in full.

Although you might be tempted to, don’t ignore unpaid debt. Your lenders could sell it to a recovery company or take you to court if you don’t repay them, and secondly, a record of non-payment will show up on your credit file. If you pay the default off, then it’s marked as ‘satisfied’ which is much better for your credit rating in the long run.

How does a default affect my chances to borrow in the future?

A default will have a long-term impact on your ability to secure credit. You may find it more difficult to obtain a fresh mortgage or credit card, for example. Lenders are likely to grant you credit on unfavorable terms unless they are prepared to do so.

Lenders are less likely to give you a loan or charge higher rates if they believe you will default on payments. This is because when a lender looks at your file, he or she is attempting to determine what sort of borrower you are. They want to lend money to individuals who can afford their payments and who will pay on time. A default is a giant flashing caution sign that you have previously missed several installments. It makes lenders anxious, therefore they are less willing to offer you a loan or demand greater interest to compensate for the risk.

There are companies that specialize in providing credit to individuals with bad credit. These choices, on the other hand, frequently come with hefty interest rates and restricted funds.

Can I have a default removed from my credit file?

If a default is accurate, you can’t have it removed. The best option would be to pay it off and focus on other ways to improve your score. Also, the further in the past the debt was satisfied, looks better to lenders. If you’re able to show that you’ve been a responsible borrower since the default occurred, this will give your score a boost too.

If the default is incorrect, you may have it deleted from your file. This might be due to a mix-up between you and the lender. You may also have an incorrect default where you recognize the debt but never missed any payments. You should contact the lender and request a statement of account, which you should compare with your bank statements.

How to have a default removed from my credit report?

If you want to remove an inaccurate default from your record, first check which credit reports it appears on. There are three main credit reference agencies- Equifax, Experian and TransUnion– so the error could appear on any of these. In some cases, it might even appear on more than one report.

Follow these steps to have an error removed:

  • Contact the credit reference agency to let them know about the mistake.
  • They may want more information regarding the problem, and they’ll appreciate it if you give it to them as far as you can.
  • The CRA should then add a notice of correction to the file so that lenders are aware that some information might be inaccurate.
  • You could also try to contact the lender in question and notify them of the problem.
  • If the lender approves, the default will be lifted from your file.
  • When the default is removed, you should see your score improve.

What can I do to reduce the impact of a default on my credit score?

If the information in your file is correct, you can’t get rid of a default. However, you may take steps to minimize the harm. Repaying all of your debts is a good first step. This implies that it will show as fulfilled in the future, which appears better to potential lenders.

If there are extenuating circumstances surrounding your missed payments, you can add an explanatory note to your file. For example, if you lost your job or were sick, this may be helpful in showing that the situation was out of your control.

There are a few things you can do to help improve your score, like being on the electoral roll and using a credit builder credit card. Check that all of your information is correct too. Just keep in mind that defaults from long ago won’t matter as much—after six years, it will be gone entirely.

Need Debt Advice?

If you’re struggling with debts, contact us to find out about a wide range of other debt solutions that help people deal with their debts and get on with living their life.

Pick up the phone and call for free debt advice on 0800 169 1536 to speak with one of our fully trained advisors for free advice. They will take the time to listen to you and learn about your debt, your life, and what you hope to achieve. Our team is empathetic to your situation and will work with you find a solution that meets YOUR unique needs–not anyone else’s. One possible solution for multiple debts could be an IVA.

Call us today on 0800 169 1536 for confidential, no-obligation debt advice. Or you can complete and submit our online Debt Help form and we’ll call you back.

Face-to-face support is available but if you would like to have a debt advice conversation through WhatsApp contact us on 07762 145 581

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