This is a very common question. It’s sometimes asked because someone’s situation has improved and they are trying to clean up old problems on their credit history as fast as possible. Sometimes it is because the borrower feels that the default was unfair in some way. In this article I look at different scenarios to see what – if anything – can be done for each of them.
But first, there is no magic trick that an “expert” can use to do this. If there are practical steps, then you can take them yourself. Don’t ever pay a firm that offers to do this for you – their claims are often exaggerated, they can’t do anything that you couldn’t do yourself.
The rules about when debts disappear from your credit record
There are three credit reference agencies (CRAs) in Britain – Experian, Equifax and Call Credit. They all apply the same two rules that determine when they delete a debt from a credit file:
- a debt that doesn’t have a default will stay on your record for six years from the date when it is settled. This applies whether it was settled in full or partially;
- a debt with a default will remain for six years from the default date. This applies whatever happens to the debt after the default – you may have paid it in full, made a full and final settlement, not paid anything to it, or still be making payments, none of these matter because the debt is still going to vanish after six years.
As you can see, the default date is a crucial piece of information for you to know. I suggest you should check your records with all three CRAs so you know exactly what they say.
“I agree with the default, but six years! That’s ages!”
If you just had a temporary problem, perhaps you lost your job, or couldn’t work when you were unwell, but after a year you were sorted and back making payments it can seem very hard for this black mark to stay on your credit file for so long.
Unfortunately there is nothing you can do to speed up the default dsappearing. You can add a Note to your credit file, which explains why the problem arose. And as the default gets older, some lenders will be less worried about it. But for some creditors, eg many high street mortgage lenders, any default, even five years ago, may result in a rejection.
Often the best you can do is repay the debt in full as soon as possible. This doesn’t delete the default but it will start to slowly improve your credit score, see Will repaying debt help my credit rating?
“The default was added very late”
The Information Commissioners Office (ICO) says that a default should normally be when you are 3-6 months in arrears compared to what your normal payments would have been. If a creditor has added a default later than this, you can ask them to correct this – see my article “What should the default date for a debt be?” which goes into more detail about this.
“It’s not fair – I only missed one payment”
In this case no default should have been added as you were never three months in arrears. Write to the lender, then appeal to the ICO if the lender refuses to correct it, see the above article about what the default date should be for details.
“The lender agreed to reduced payments but still added a default”
This can feel very unfair, but legally they can do this when the arrears compared to what you should have paid reach 3-6 months. What you have set up is termed a “debt management plan” even if it was just an informal agreement with one lender. See How does a DMP affect my credit rating for more details – that also explains why it may feel wrong, but you could actually be better off with a default, rather than an Arrangement To Pay marker on your file!
“The lender is adding a new default every month!”
This is normal. What matters is the original default date, it will drop off six years after that, the latter defaults don’t matter. You may think it’s making your credit rating even worse, but lenders’ scoring systems will only be looking at the first default.
“A debt collector has added a later default”
They shouldn’t have done this. A debt collector can add a new record, but it should have the same default date as the original lender. Write to the debt collector and ask them to correct it, and then appeal to the ICO if necessary.
“I never owed this money”
In this case you need to ask the lender to delete either the whole record (if the debt never belonged to you at all, it is some form of mistaken identity) or the default (if it was your account but you were never in arrears).
“I was never properly informed about the debt”
Arguments can occur between you and a creditor if you feel they didn’t properly write to you about the debt, explain what the debt was or the size of it. Perhaps you moved house and the creditor carried on writing to your old address even though you notified them you had moved – this sort of thing. If you paid the debt promptly as soon as you became aware of it, you could ask the lender to remove the default. You may have more luck going to the relevant Ombudsman rather than the ICO if the creditor refuses.
“The debt isn’t enforceable”
Sometimes a lender will admit – or a court may decide – that a debt isn’t enforceable. If this is because it is statute barred, then a default should have been added to the debt over six years ago so you should ask for the default date to be corrected if it is later. But if it is unenforceable for other reasons, the debt still exists and the lender may refuse to delete it from your record because you do still owe the money.
“I should never have been given the loan!”
Until a year ago I would have said you will find it hard to make this argument work… but since then thousands of payday loan debts have been deleted from credit records, see this article from Experian about Wonga loans.
If you think you were give payday loans that were “unaffordable” (ie you couldn’t have repaid them on time and still be able to meet your other financial commitment such as rent, bills, food etc) then look if you can ask for any compensation for these and say that as part of this compensation you would like the loan deleted from your credit file – see How to ask for a payday loan refund for details. The template letters in that article really are working!
In theory you could make out a case like this about other sorts of lending – door-step lenders and catalogues often aren’t very careful, shall we say, about checking your credit file before lending or increasing lending – but at the moment I am only aware of payday loan cases being won. Any such complaints should be addressed to the lender first then the Financial Ombudsman, not the ICO.
I was in an abusive relationship
Many people, usually women, have been pressured to take out credit for a partner or had a joint account with an abusive partner. Financial abuse is now starting to be recognised as a serious problem, see this April 2016 report from Citizens Advice. If you feel the debt and the default resulted from an abusive relationship, I suggest going to your local Citizens Advice and asking for their help to see if the debt could be written off and the default removed.
Summary – getting rid of defaults
If the default doesn’t comply with the “3-6 months arrears” rule then you can ask for it to be corrected. But if the default is in line with the “3-6 months arrears”, there isn’t normally anything you can do about it except wait for it to get older and then drop off.