If you have a default on your credit report, you might find it’s a bit harder to borrow money. However, there are ways you can lessen the negative impact. To help improve your chances of accessing credit, here are a few tricks that can help your credit report bounce back.
What is a default on a credit report?
A default is marked on your credit file when a lender closes one of your accounts due to missed payments. For instance, say you haven’t been able to keep up with your household bills for around 3-6 months.*
Accordingly, a utility or mobile phone provider might decide to close your account and stop you accessing their service.
How long does a default last for?
A default stays on your credit file for 6 years. It will remain there even if you clear your debt, so it’s important to try to avoid getting one altogether. If you do have a default on your credit report, it can make it trickier for you to borrow money. This could be in the form of higher rates than you were expecting, or simply not receiving any credit offers at all when looking for a loan, credit card or mortgage.
Can I get someone to remove a default?
You can only get a default removed from your credit report if you can prove that it was an error. Get in touch with the credit referencing agency and explain the situation. The credit referencing agency should then get in contact with the lender to check the accuracy of your claim. They’ll add a ‘Notice of Correction’ in the meantime to signal to other lenders that the default may be a mistake.
If the lender realises the default is an error, they will update your credit file. If they don’t agree however, the default will remain on your credit file.
Can I reduce the impact of a default?
Although the default will remain on your credit file for six years, there are a few things you can do to slightly lessen the impact.
- Pay off what you owe – although this won’t remove the default from your file, once the debt is paid off, they mark it as ‘satisfied’. Although it doesn’t completely negate the negative impact, it will look better to lenders.
- Offer an explanation – it is possible to get in touch with a credit referencing agency & ask them to add a note explaining the circ*mstances around your default. For instance if you experience a redundancy.
- Wait it out – if you get your finances back on track, the negative impact of the default will reduce over time. So, after a few years, you may find you have more credit options again.
Can I rebuild my score in other ways?
Yes, concentrating on other ways you can improve your credit score could improve your access to credit. A few quick tricks include:
- Register to vote – being on the electoral roll helps lenders verify your address and makes you appear more reliable.
- Keep your credit utilisation low – say that you already have a credit card. Only spending 30% of your available credit limit each month can improve your credit score. However, this is only true if you’re making at least the minimum monthly repayment. More missed payments could make your credit report worse, so only borrow what you can afford to pay back.
- Get a credit builder card – suppose you don’t already have a credit card and you think you’re back on track with your finances. You could check if you’re eligible for a credit builder card. These cards are often available to those with less than perfect credit histories. Use it for a few small purchases and pay it off in full each month: as a result, you can rebuild your credit score over time.
- Clear any outstanding debt – it’s not always easy to clear your outstanding debt, but clearing down as much as you can each month, even a small amount is recorded each month and counts against your score
Want to see how your eligibility for credit is shaping up? You can quickly check your options with over 50 UK lenders with Aro, without impacting your credit score.
FAQs
You can only get a default removed from your credit report if you can prove that it was an error. Get in touch with the credit referencing agency and explain the situation. The credit referencing agency should then get in contact with the lender to check the accuracy of your claim.
Can you get defaults removed from a credit file? ›
Once a default is recorded on your credit profile, you can't have it removed before the six years are up (unless it's an error). However, there are several things that can reduce its negative impact: Repayment. Try and pay off what you owe as soon as possible.
Is it worth paying off a default? ›
Paying the default won't improve your credit score (unless you pay it within the first month, in which case it will be removed completely) but it may improve your chances of getting credit further down the line. You will also get less contact from your creditor if you're paying something towards the debt.
How much will my credit score go up when a default is removed? ›
However, it is hard to give you a clear estimate on how big your score improvement will be, as credit scores depend on many things. On average, most people see an increase of about 200-250 points. But you shouldn't wait six years. You can still fix your credit file even if you have CCJs on your file.
Do I still have to pay a default after 6 years? ›
For most debts, the time limit is 6 years since you last wrote to them or made a payment. The time limit is longer for mortgage debts. If your home is repossessed and you still owe money on your mortgage, the time limit is 6 years for the interest on the mortgage and 12 years on the main amount.
How to fix defaults on credit file? ›
You can only get a default removed from your credit report if you can prove that it was an error. Get in touch with the credit referencing agency and explain the situation. The credit referencing agency should then get in contact with the lender to check the accuracy of your claim.
Can a default notice be reversed? ›
However, if the default was issued in error, you have every right to have it revoked. If you've paid the amount claimed in the default already, or a default notice was sent to you by mistake, you'll be able to ask for this to be removed from your account.
Is a default worse than a late payment? ›
Even if a late payment only reduces your score a little, it could take you beneath the lender's cut-off point for approvals. Sometimes, late payments can lead to a default or a County Court Judgment. These are likely to have a more serious impact on your credit score.
How many points is a default credit score? ›
In general defaults are one of the worst penalised actions on a credit rating and could cause you a loss of up to 350 point on your credit rating, while a CCJ will cause up to 250 and missed payments on bills up to 80.
Can I get a mortgage with defaults? ›
The good news is it's absolutely possible to get a mortgage with defaults, you'll just have fewer choices than if you had a perfect credit score. A lot of high street banks don't like to see defaults on your mortgage application, so you'll need to find a specialist lender.
How long does it take for your credit score to go up?
| Event | Average credit score recovery time |
|---|
| Bankruptcy | 6+ years |
| Home foreclosure | 3 years |
| Missed/defaulted payment | 18 months |
| Late mortgage payment (30 to 90 days) | 9 months |
3 more rowsJul 27, 2023
If you default on a credit card, it's possible you may never again be approved for a credit card from that particular card issuer — even if you rebuild your credit to the point where you can qualify for other cards. Issuers keep track of which customers have had debt charged off.
How long does an unpaid default last? ›
Commercial credit defaults stay on your credit report for five years even when you have paid the overdue amount. The status of the default is updated to paid which can be looked upon more favourably by lenders but it will remain as part of your credit history.
Is it true that after 7 years your credit is clear? ›
Highlights: Most negative information generally stays on credit reports for 7 years. Bankruptcy stays on your Equifax credit report for 7 to 10 years, depending on the bankruptcy type. Closed accounts paid as agreed stay on your Equifax credit report for up to 10 years.
How long before a debt becomes uncollectible? ›
Is defaulting on a credit card a crime? ›
Failing to pay your credit card debt is not a crime. While not a crime, it does have serious consequences, like we mentioned above. After the lawsuit judgment, it is entirely possible that you will have a very difficult time obtaining loans, credit cards, and even employment.
Can a credit provider remove a default? ›
A default can be removed if the debt wasn't even yours. This could happen if there's a simple case of mistaken identity or someone has fraudulently taken out the loan or bought something on credit in your name.
How do I get a defaulted loan off my credit report? ›
Rehabilitate Your Loans
Normally, one of the main ways to get out of default is by rehabilitating your loans. But right now, loan rehabilitation has been replaced by the temporary Fresh Start program. After Fresh Start ends, loan rehabilitation will be an option again.
Can debt collectors remove default? ›
Getting Collectors to Remove Negative Information
The collection agency might tell you that they can't make that decision—only the original creditor can remove the information. Ask for the name and phone number of the person with the original creditor who has the authority to make this decision.
Can I wipe my credit file clean? ›
So, if your credit score is not to your liking, you may be wondering if you can wipe your credit history clean. Although you can't wipe it clean, you can utilize best practices to help build better credit going forward and maybe even earn a higher credit score over time.
