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.
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.
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.
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:
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.
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.
You might be interested in: How to get a loan with an IVA.
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:
Looking for lenders that offer loans to people with a bad credit score? See our list of the best bad credit lenders.
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.
The default removal success mainly depends on the creditor. Credit bureaus cannot remove a default without getting consent from your creditor.
Removing a default from the credit file can improve your score unless you have other negative items that are bringing it down.
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.