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How To Get Defaults Removed?

Written by, Marija Petkova

Updated July, 21, 2022

A default can plummet your credit score and hurt your chances of getting a loan.

If you’re wondering how to get defaults removed or reduce their negative impact on your credit score, read on.

What Is a Default Notice and What Is a Credit File?

A default occurs when the lender closes the borrower’s account because you’ve missed your payments.

It usually happens when you miss payments for over 3-6 months, but this can vary depending on the lender’s terms.

Before you receive a default, your creditor will send you a default notice, warning you that you’ve missed several payments. You’ll have at least two weeks to make the repayments.

If you don’t, the default will be applied and recorded on your credit file. Your credit file is a detailed breakdown of your credit history prepared by a credit reference agency, which lenders look at when you apply for a loan.

The credit file features your name, address, mortgage, loans, missed payments, CCJs, bankruptcy, and other activities.

How Long Does a Default Last On Your Credit File?

The default will stay on your credit file for six years, starting from the day it was applied, and will remain there regardless of when you cover your debt.

This means that the default will show on your credit report even if you pay off your debt earlier.

Once the default is removed from your credit file, it won’t show up on your record anymore, even if you still haven’t finished paying it back.

When Can a Default Be Removed And How Can You Remove It?

Removing defaults from a credit file before the 6-year mark is only possible if they were added there by error.

If you’ve received a default on your credit file and you’re certain you’ve paid what you owe on time, the first thing you can do is contact your lender directly. They can reach out to the credit bureau and ask it to fix the mistake. 

You can also contact the credit bureau first, in which case they act as an intermediary between you and the lender. The credit bureau will contact the lender to ask if the data in your credit report is accurate. If the lender confirms to the credit agency that the data is incorrect, they will update your report to reflect that

If your lender believes the data is correct but you disagree, you can petition the credit bureau to remove a default from your credit file if:

  • The lender didn’t collect the payments.
  • You’ve been in arrears for less than 3 months.
  • You have duplicate defaults.
  • The debt was ‘statute barred’, which means the creditor didn’t take legal action to recover the debt on time.
  • If you’ve been sold unaffordable credit (sometimes). 

Note: Credit agencies cannot remove a default from a credit file without the creditor’s consent.

If your creditor still refuses to remove it, you can write to the Financial Ombudsman, explaining why the default has been applied to your credit file unfairly. 

If they find this is the case, they can remove the default from your credit file.

How To Reduce The Negative Impact Of a Default

You can’t remove defaults from a credit file (unless it was added there by mistake), but there are things you can do to reduce its impact on your credit score.

  • Repayment: If you repay your debt early, your creditor will notify the credit bureaus and they’ll mark your default as ‘satisfied’ on your credit file, which will look better to lenders.
  • Explanation: You can ask the credit bureaus to add a note to your credit report, so lenders can better understand why you’ve missed payments. This can be helpful if you’ve missed payments due to a long-term illness or redundancy.
  • Time: The default becomes less important to lenders as time passes, which means it will be easier to get approved for a loan or get better rates after a few years.

You might be interested in: How to get a loan with an IVA.

Does Your Credit Score Go Up When a Default Is Removed?

Defaults can hurt your credit score only if they’re there. Once your default drops off from your credit file, your credit score will improve

But, that doesn’t mean you can’t boost your credit score further

Here’s what you can do to improve your credit score after the 6-year mark:

  • Check for other credit report errors: If you find any errors on your credit file, you can dispute them with the credit bureau. Their removal should increase your credit score.
  • Register for voting: Adding your name to the electoral register makes it easier for lenders to verify your identity and might slightly improve your credit score.
  • Linked credit file: Check if your credit file is linked to someone else. Their score can affect yours. If that’s the case, you can split them.
  • Reduce credit utilisation: Your credit utilisation is the ratio of your total credit to your total debt. It’s best to keep it around 30% at all times.

Looking for lenders that offer loans to people with a bad credit score? See our list of the best bad credit lenders

Bottom Line 

A default happens when you fail to make repayments anywhere between 3-6 months. 

Once it’s added to your credit file, getting a default removed is only possible if it ended up there by mistake. If that’s not the case, the default will stay on record for six years– even if you repay your debt earlier than that.

                           

Frequently Asked Questions And Their Answers

Can a creditor remove a default?

The default removal success mainly depends on the creditor. Credit bureaus cannot remove a default without getting consent from your creditor.

Does your credit score go up when a default is removed?

Removing a default from the credit file can improve your score unless you have other negative items that are bringing it down.

How long until a default is removed?

A default is automatically removed from a credit file after 6 years. The default will disappear from your credit report even if you haven’t paid off the debt entirely.

Paying off a default early will be reflected in your credit file, which might improve your chances of getting a loan (and better rates). You won’t be able to remove the default but it will be marked as ‘satisfied’.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.