A reader asked ” I had some defaults on my credit record. The oldest one has just dropped off. It was over £7000 which I had repaid under a full and final settlement agreement. The other default left have three or four years left before they fall off but I’ve settled them all in full and they were also smaller than the first one that has gone.
I thought with the big, partially settled debt gone I would see an improvement – why hasn’t this happened? It seems that even though I have dealt with my old debts and one default has now gone and I haven’t got any more debts, my credit score isn’t going up.”
A lot of people have similar worries – they have had debt problems in the past and they really want to know when their credit rating is going to reflect the fact that they don’t have these problems any more!
So let’s look at the things which matter in this sort of situation, so you can see which might be relevant for you.
Monthly updates
Defaulted debts disappear from your credit record 6 years after the default date. Closed accounts that weren’t defaulted disappear 6 years after the settlement date.
Future lenders who check your credit file will always see the real up-to-date situation. But some credit reports for consumers are only updated once a month… so don’t be disappointed if that old default still seems to be sitting there when it should have gone last week!
That doesn’t seem to be the problem this reader is having as he says the defaulted debt has gone, but it’s something to be aware of.
Easier to harm a credit score than improve it
Lenders don’t like defaults. Any defaults. So although having one default disappear is going to be good in the long run, if the rest of your credit file is still showing lots of problems, your score may well not increase much, if at all. As more defaults go, your score will improve, it just takes time.
And it’s really important that you avoid any new problems appearing. If you have a defaulted debt, you may wonder what the point is in making payments to it, if it will disappear anyway… but by starting to repay the debt it is much less likely that the creditor will try to get a CCJ which would spoil your credit record for another 6 years!
Your defaults matter less as they get older
A default in the last couple of years can reduce your credit rating by 350 points, but as they get older the penalty is reduced. See How much will my credit score change if… ? for details.
You need to start getting some positive markers
Although it takes time for the problems to disappear, you can help your credit score to improve faster by getting some new positive markers added each month.
The reader here doesn’t want to get back into debt – quite understandable! But having a credit card and repaying it on time every month will help a bit at the moment. And then when the last default goes you will have a few years of perfect markers showing and a great credit score. If at that point you don’t have any regular credit you are using, your credit score isn’t going to be so good as your record will be “too thin”, not showing a future lender that you are good at managing credit.
Try MoneySavingExpert’s “soft checker” to see what credit cards you are likely to be approved for. If all you can get is a “bad credit” card at a dreadful interest rate and a low credit limit, take it and use it every month but repay it in full every month. That way you will never have to pay any interest at all! Be on the look out for the “bad credit” card traps, but if you are careful, these are a great tool for improving your credit record.
Speed up improving your credit rating
Amigo – not a way to rebuild a credit rating
Overdrafts – a hard type of debt to clear
SG says
Hello,
I appear to have 2 defaults for the same accoutn by two different originators… is this correct?
or can i ask for one to be removed
Sara (Debt Camel) says
Was one the original creditor and one the debt collector it has been sold to?
SG says
Hi
Yes that is correct
Sara (Debt Camel) says
Then having 2 defaults is fine. The one with the original creditor should have been marked as closed with zero owing. And the new one should have the same default date as the original one. If both of those are correct, this is nothing to worry about, the credit scoring systems treat it as just 1 defaulted debt.
S says
hi
I have an account with EE which was “sold” to Vanquis for repayment back in 2016. I have been paying £10:19 each month for the past two years to clear the debt( balance now £700).
EE have placed a default on my credit file in June 2018,
is this correct?
can i ask them to remove it as i am paying the debt off?
Sara (Debt Camel) says
Sold to Vanquis? Are you sure that is the right name?
dona says
hello, why the same default with noddle says £0 balance and status satisfied with experian £0balance but current status default?
one more question, I despute one of my deafaults with experian, cos the balance was wrong, I logged in today and looks like deafault just gone, disappeared, but when this entry was wrong from the begginning but they took 350 point away from , are they gonna add some points to my score now?
Kind Regards
Dona
Chlo says
Hi, I have raised a dispute with Experian as there was a default listed on there for a company that is no longer in business. I have email proof that the debt (£140) was settled and they had agreed to remove the default as they had been writing to an old address even though they had been updated.
Experian have now supressed the record of the default as they cannot contact the company concerned but what does this actually mean? They have said my credit score may change when my file updates on 5th April but will that be positive or negative?
I have no other defaults or CCJ’s etc.
kind regards
Chlo
Sara (Debt Camel) says
If a default is being removed and you don’t have any others, this must be positive for your credit score.
S says
Yes thats what they stated on the phone….
they were very vague
the default they have posted shows the balance of £747.00
they gave me an email address to email their credit query department ( credit.queries@ee.co.uk) but hey,,, that email account doesnt exist..
all i want is the default removed and to pay the balance…
thanks
Sara (Debt Camel) says
I think you need to pursue if they are writing this off. If they are, then there is probably something wrong with the debt, creditors don’t just decide to buy back debt for no reason. If there is something wrong with the debt, then that may give you a good case to ask for the default to be removed…
So I suggest you ask EE for a copy of all the personal data it holds about you. Do that from this page https://ee.co.uk/eeprivacycentre/ee-privacy-policy.
Mrs Cheaplaugh says
I had a complaint with Barclaycard They put a default on my credit file. I asked them to remove it arguing that my balance was increasing every month for 3 years despite paying minimum payments by Direct Debit. After a review 3 years ago, they refunded the interest (not at my request). It was still over limit then eventually defauted. I’d cancelled the direct debit. The payments were becoming unmanageable , having other financial problems . Fast forward 2 years to last year and they wrote to me saying they had provided less than satisfactory service and refunded more money. I’d repaid the debt so decided to ask them to remove the default as I wouldn’t have been in that position had they been more vigilant with their minimum payment calculations. They replied saying ‘no’ but are now refunding all my overlimit charges plus a £50 gratuity. Do you think I have a case with the FOS to remove my default?
Sara (Debt Camel) says
It’s a case, but I don’t know if you will win it.