A reader asked if starting to pay a defaulted account will help his credit score. The simple answer is No!
But there are very good reasons why paying defaulted debts will improve your general credit situation, making it easier for you to get a loan, a mortgage or a credit card in future. That credit rating number isn’t the only thing that matters!
To start, it’s good to know what your credit history is now by checking all three credit reference agencies.
Six years is the important date
A defaulted account will drop off your credit record six years after the default date.
It doesn’t matter what happens after the default – whether you pay the account in full, start paying it, agree a partial settlement or don’t pay anything at all, the account will still be deleted after six years.
So find out what all your default dates are. If you think one is too late, read What Should the Default Date Be? which explains how to get an incorrect date changed.
Your credit record gets better after six years unless…
This may sound as though your credit score will get a lot better after six years even if you pay nothing. This is correct, but there is one big exception – your creditor may take you to court and get a County Court Judgment (CCJ). This CCJ would then stay on your file for another six years. Most lenders regard a default as bad but a CCJ as worse.
You may be hoping this doesn’t happen, unfortunately after five years and a few months, a debt collector may contact you and threaten court action if you don’t set up a payment arrangement. If you have moved and not told the creditor your new address, you could get a CCJ without being aware of it.
If this doesn’t happen and the defaulted account drops off, then your credit score will improve immediately. How much will depend on what else is on your credit record – if you have a lot of other debts still showing you may not notice the difference until the last ones go.
Older defaults are less bad for your credit score
Your credit record starts recovering from a default before the end of the six years. I asked Experian how their credit rating calculations changed as a default gets older. The following numbers show what happens to Experian’s credit score if there is only one default and if nothing else changes on your credit record:
- in last 2 years – 350 points
- 2-4 years ago – 250 points
- 4-6 years ago – 200 points.
In practice there is almost always something else changing every month, so you shouldn’t expect to see those exact numbers but they give a feel for what is going on. For some more examples of how much different things affect your credit score, read How much will my credit score change if… ?
Your credit score doesn’t improve faster if you settle the debt, but…
Most people will expect that if they repay a defaulted debt their credit rating will suddenly improve. This doesn’t happen. So you may wonder why you should bother!
There are two very important reasons to start to repay a defaulted debt.
- if you are making payments a lender is a lot less likely to go to court for a CCJ. A CCJ is much worse for your credit record than a default, and it would be on there for another six years.
- lenders all make their own assessments, they don’t just use a credit score. Many lenders regard a settled default, as much less of a problem. So by repaying a defaulted debt you are more likely to get approved for a new loan.
That last point is especially important for mortgage applications. You are very unlikely to get a mortgage at a reasonable rate if you have unpaid defaults. The sooner you can repay them the better.
Each lender sets their own rules, but a current rule of thumb is that if all your defaults are over three years old and they have been repaid for more than a year, it’s worth talking to a broker about whether a mortgage is possible.
This also applies to CCJs
Exactly the same applies to CCJs. If you pay them in the first month the CCJ will drop off completely. But after that if you repay the CCJ and get it marked as satisfied, your credit score will not increase at all.
Again there are good reasons to repay a CCJ – you won’t get hassle from bailiffs or money being taken from your wages. But you are stuck with the bad effect on your credit score for 6 years.
Is it worth making low payments to a defaulted account?
Low payments won’t make much of a dent in your debt, even if interest and charges are frozen. There are positive reasons in favour of token payments – once agreed with your creditors, they will reduce the hassle you get and also make it less likely that you will get a CCJ – but they aren’t going to improve your credit record or make it more likely you will get more credit.
If you expect your situation to improve, then low payments are a good option, but if this seems unlikely then you should probably look at what your alternatives are.
Will a consolidation loan help?
If you have poor credit, it is very rare for a consolidation loan to help.
Using it to repay some defaulted debts or debts with payment arrangements is not going to improve your score. And the loan is going to be expensive – it’s usually better to get a payment arrangement to repay defaulted debts as then no more interest is going to be added.
And getting a guarantor loan to consolidate debt can be a major problem – if you run into difficulty you will then be desperate to protect your guarantor.
It’s better to talk to a debt adviser before taking a consolidation loan.
Conclusion
So although the answer to the reader’s question was No – repaying defaulted debts won’t improve his credit score faster, this isn’t really the full picture. A better reply is:
Your credit score will improve gradually as your defaults get older. This doesn’t speed up when you repay a defaulted debt, but some lenders are only likely to lend to you once defaults have been paid. And starting to repay debts makes a CCJ much less likely, which would make your credit record worse.
Consolidating with bad credit?
Can you get a mortgage with your debts?
FAQs on statute barred debt
Tim Min says
Hi Please help as I’m perplexed as to why the Trans Union credit report is so low? Both my Experian (963/1000) and Equifax (937/1000) credit scores are rated ‘Excellent’ and have been for some time, and even my affordability score for Equifax is 77/100, but TransUnion (544/710) is rated ‘Very Poor’ ? and just doesn’t move?? I’ve been over and over the data they have on me but its just the same as the other 2 agencies? I don’t have any CCJ’s or other public records, I’ve been in credit with my current account for a few years now? I’ve paid off one credit Card and don’t use it, and I’m in the process of paying off a Nationwide one and its now 43% of the available credit. I have a mortgage (as do most people) its currently a capital and interest payment and outstanding balance is 178K on a house that it valued at 400k. I have a regular income and have done since 2019 and my bank account shows that there are wage payments from from my Company regularly on a monthly basis of between £5000-10000 per month. I also haven’t missed any credit payments for years now?
Tim Min says
So recorded on all 3 credit reference agencies are 4 default records, this was a really difficult time in my life. In 2019 I was without work and I was not living in the family home either, so there was a point in time where my mail was not being picked up and I missed the default notices, this resulted in the Halifax, and Cahoot, defaulting the accounts I had with them.To put things right, For Halifax and Cahoot, I paid off in full the money that was owed to them, this can be seen in the credit ref’s history and those accounts are closed, I also had a payment plan setup to clear the balance on the Nationwide credit card, and as described above this is now 43% of the available credit with them. In 2019 I was without work and I was not living in the family home either, so there was a point in time where my mail was not being picked up and I missed the default notices, this resulted in the Halifax, and Cahoot, defaulting the accounts I had with them. To put things right, For Halifax and Cahoots, I paid off in full the money that was owed to them, this can be seen in the credit ref’s history and those accounts are closed, I also had a payment plan setup to clear the balance on the Nationwide credit card, and as described above this is now 43% of the available credit with them.
Tim Min says
What happened in 2019 was an unforeseen breakdown in communication, however, the impact of this should have reduced on my credit records (its over 4 years since any default) the impact has reduced with the other 2 credit agencies, but with TransUnion, nothing changes? to be honest, my current personal financial status is better than it has been ever in my life, but the TransUnion score is preventing even my wife getting a new phone on contract, simply because she is associated with me. How can the TransUnion score be showing me right at the bottom of their scale and the other 2 credit ref agencies I’m right at the top due to the massive work I’ve been doing to improve my financial status. In short, I have a regular ‘Good’ wage 5-10k a month, I have a mortgage with LTV less than 50%, I have a credit card with a limit of £1400 and zero balance, I don’t have an overdraft, I don’t have any loans, or outstanding credit (other than Nationwide’) I’ve lived in the same house for 18years, I’m on the electoral register, I have no CCJ’s or bankruptcies, I’ve had no late or missed payment for some years now, and I’ve had no searches, (other than the soft searches) for years and years, my wife is in full time employment earning 50k a year. I just think for some reason TransUnion are unfairly penalising me, when the other 2 agency’s determine that work has gone on to rectify a problem, any help is greatly appreciated.
Sara (Debt Camel) says
First you need to ignore the Very Poor and Excellent labels the CRAs use. Your TransUnion Score is out of 710 is the equivalent of about 812 out of a 1000. Equifax would label a 812 score as Excellent and Experian would label an 812 score as Fair. So yu can see these labels cannot be compared. And no lenders care about the labels.
Obviously however your TransUnion score is significantly lower than the other two. But with 4 defaults on your credit record, I would say the Experian score looks unusually high rather than the TransUnion score being unusually low.
The credit card you have cleared – were there any payments problems at all on that? And were there any on the Nationwide card you are clearing?
Abbie Hirst says
Hi, I have 5 credit cards that defaulted back in 2020
and have been sold to debt collection agencies, which I am paying back a small cost each month. Will these defaults still disappear after 6 years if they have been taken over by an agency? They are listed on my credit file with default dates.
Sara (Debt Camel) says
yes they will.
But at that point you have to carry on paying them, see https://debtcamel.co.uk/debt-not-on-my-credit-file/
Wesley says
Hi Sara,
I have two defaults from early 2020. I’m focusing on repaying as much of the one that remains with the credit card company to try and avoid them selling the debt on. The second default was sold to a collection agency in 2020 and I’m making the same payment as I made previously (if I carry on making the same payments, I will not have settled the debt before it drops off my credit report). My question is whether the collection agency can (1) get a CCJ if I am making payments and/or (2) sell my debt on again the closer it gets to the 6 year mark and whether I would be wise to try and up these payments as soon as I can? I am not keen on trying to go down the final partial settlement offer route.
Thank you for your website, it is a big help.
Sara (Debt Camel) says
I’m focusing on repaying as much of the one that remains with the credit card company to try and avoid them selling the debt on.
Why? Debt collectors are often easier to deal with and are much more likely to accept a settlement offer than the original lender.
1) get a CCJ if I am making payments
Yes. But they won’t usually if you have shown you are paying all you can afford
2) sell my debt on again the closer it gets to the 6 year mark
yes but why would you care?
and whether I would be wise to try and up these payments as soon as I can?
the sooner they are cleared the sooner you can move on
I am not keen on trying to go down the final partial settlement offer route.
Can I ask why?
Wesley says
Thanks very much for your responses.
“Why? Debt collectors are often easier to deal with and are much more likely to accept a settlement offer than the original lender.”
This is mostly because the debt collector reports a 100% utilisation no matter what I pay down while the credit card company still reports a reduced utilisation every payment. Not awful, but not ideal as I rebuild my credit worthiness.
“2) sell my debt on again the closer it gets to the 6 year mark
yes but why would you care?”
Both the second credit card default and when they sold it to the debt collection agency gaining of the default are on one of my credit reports (2 defaults recorded when I feel it should be just 1?). I have tried to have one of the defaults removed but haven’t been successful so far. So I’m just very wary of anything getting sold on again. Or should the debt drop off anyway in the usual timeframe?
“I am not keen on trying to go down the final partial settlement offer route.
Can I ask why?”
For sure. I have to remortgage in a couple of years and I would prefer no partial settlement recorded in case they see I don’t settle my debts completely. Is that the wrong way to look at it?
Sara (Debt Camel) says
2 defaults recorded when I feel it should be just 1
this is normal. But importantly only 1 of the defaults is counted in the credit scoring system. It doesn’t harm you at all.
Or should the debt drop off anyway in the usual timeframe?
Yes it will. Having a debt sold should not change the default date. It will still go after 6 years.
I have to remortgage in a couple of years and I would prefer no partial settlement recorded in case they see I don’t settle my debts completely.
See https://debtcamel.co.uk/dmp-partial-settlement/
But
1) your situation is that you will not have cleared all the defaults by that point – correct? That is MASSIVELY more of a problem for a remortgage than having cleared them with a partial settlement.
2) if you only need a new fix from your current lender, not a change to the amount or term, then if your lender is a normal high street lender they will not check affordabilit or your credit record, see https://www.gov.uk/government/news/mortgage-lenders-commitments-to-borrowers
Wesley says
Yes it’s correct it would not have cleared by then, I did not realise a remaining default was worse than a partially settled one and I will now prioritise trying to partially settle both defaults. Thanks for all your advice Sara, I appreciate it.
Sara (Debt Camel) says
I have asked an expert at Experian about your point that the credit card company reports a reduced utilisation every month, because it sounded odd to me.
I am told that Experian does not use any “utilisation” numbers after a default has been recorded. So there is no difference to your credit score whether the debt is sold or not.
Wesley says
Thank you Sara, I really appreciate your thoroughness. I’ve checked my Equifax (ClearScore) and Experian (MSE Credit Club) reports and neither are reporting the sold on default in that way. It seems to be CreditKarma (TransUnion) who are doing this; though perhaps that is just CreditKarma trying to encourage me to take further credit through them?
Sara (Debt Camel) says
it could well just be the way CreditKarma reports.
Or it could be an oddity in the way TransUnion scores. It would be silly for TransUnion to count a defaulted account as helping your utilisation as you can no longer spend on that account so the credit limit is not available to you. But I suppose that doesn’t mean TU aren’t doing this.
Kimberly D says
I have a default from 2017 and is the account was settled and the account closed in the same year. It is finally coming to the time it comes off my credit score. Will I gain points when it comes off?
Sara (Debt Camel) says
See https://debtcamel.co.uk/credit-score-change/. But it depends on what other problems are still showing on your credit record. The more other problems there are, the less getting rid of just one of them will help.
Maureen says
I have a default of £6000 from 2009 which I have been paying £5 per month. I’ve not missed any payments on it and settled it partially at an agreed £1800 two months ago. I’m in the process of getting a mortgage. The company is asking about this and evidence of settlement which I’m in the process of doing. Will this affect my chances of getting a retirement interest only mortgage. I have a substantial deposit and excellent credit score and no missed payments for 13 years. No ccj’s either. I have been approved in principle.
Thanks
Sara (Debt Camel) says
Retirement interest only mortgages are a specialist are and I don’t think there is any point in me guessing this.
Who was the original lender?
Maureen says
MBNA who set up the £5 per month payment plan. They then passed this to Westcott who were subsequently taken over by Cabot. The payment plan was reviewed over the years but remained at £5 which I paid by DD. I know I’ve been stupid in not settling this earlier.
Sara (Debt Camel) says
Well if this means you are Rejected for the mortgage, then send a complaint to MBNA asking them to backdate the default to 2010. It will then immediately fall off your credit record.
Maureen says
Thanks for that suggestion but It’s not on my credit record , never has been for some reason. It showed up on my bank statement and was queried from there.
Sara (Debt Camel) says
Ok, then if this applicais rejected, you can Apply to a different lender in a few months time as most lenders only go back 6 months in the statements. If you went through a broker they should have explained this to you.
Maureen says
Thanks Sara. Fingers crossed this application will be accepted otherwise I will take your advice.
Kind regards
Neshet says
Hi Sara,
I am in £20,000 of debt mostly credit cards and pay pal.
All my cards are In default. I am studying a masters in nursing and within two years I should have a full time job and be able to pay my debts off but they some of them are at least more then 4 years old. I am making small payments each month but recently noticed no my minimum payments have been not made on a few of the Accounts, as I set up a stand order they should just continue anyway, so I don’t have any CCJs but I will need to contact all agency’s Tomorrow to find out why my payments are not showing on my credit file. Sorry to go on but do you think I would be better off declaring bankruptcy? Or should I continue making small payments? I am hoping to apply for a mortgage in five years time what are my chances if I declare bankruptcy?
I am only I think two/three years away from my debts bring 6 years old. There is also one more question regarding PayPal they never replied back to my messages and never asked for any payments would you know why? Also how would I improve my credit score I only have one band : (
Sara (Debt Camel) says
There is an alternative to bankruptcy called a Debt Relief Order – I suggest you talk to National Debtline on 0808 808 4000 who can advise on all your options and talk through the pros and cons with you.
I think you have to be very realistic about your chance of a mortgage on 5 years. That will have required to you to repay all the defaulted debts at least a year before an application AND to have saved up a deposit. If you need a 20k deposit, that means being able to clear debt and save at a rate of over £1000 a month.
How old the debts are isn’t important. If the defaults will soon be over 6 years ago, then they will drop off your credit record then but still have to be cleared at least 6 months before a mortgage application as the mortgage lender will see the payments to them on your credit record.
You have no chance of significantly improving your credit score until the defaulted debts drop off. Don’t be tempted to get “credit builder” cards, they will make little difference and all too opften just result in more debt.
Neshet says
Thank you so much for your invaluable advice Sara.
Rosh says
Hi,
I have a default on an account from 05/19.
I was going through an awful place mentally having lost a family member and was on a payment holiday for my credit card due to chronic depression and was under the care of the MH team. Following a break up I moved out of my house. I contacted my banks with my new address and when I phoned up my bank a few months later to discuss my payment holiday they said that that had ended, they had tried to contact me through letters/phone calls but had no response and my account was defaulted. I was very shocked as genuinely had received no contact with them. They had my current address on file and I had certainly received no post of phone calls from them.
I have since tried to contact them to start arranging repayments but they have no record of this particular account so I have no idea how to start making repayments and I have received no communication with anyone.
Even though I feel this default was very unjust as I was on a payment holiday and there was no communication to suggest otherwise, I am aware that it has been several years and I am anxious to start paying back something – even though I do not have a lot to give. Any advice on what on earth to do please?
Sara (Debt Camel) says
A default drops off your credit record after 6 years, which will be in 2025. A payment arrangement marker stays on for 6 years after the debt has been settled, which will be a lot longer, probably 2030 or later. So although a default is worse, it is all over much sooner.
Also technically a lender is allowed to add a default when a debt is in a payment arrangement when it gets to being 3-6 months in arrears.
So although it sounds as though their communication was very poor, especially if they were aware of your MH problems (were they?), at the moment it seems best to ignore the issue of them not telling you about the default.
What is your current financial situation like? Do you have other problem debts? Any arrears on important bills?
Do you mind saying how large this debts is?
Rosh says
I am worried as I’m not sure how to begin making repayments as the bank doesn’t seem to have the information anymore.
They were aware of the circumstances – to the point where they had phoned me a few times to see how I was doing. I changed my address straight away and received no contact from them to say the payment holiday was coming to an end/that it would default otherwise I would’ve made the minimum payments. I know I don’t have a leg to stand on to fight this but I don’t want to end up getting a CCJ.
I’m not in a brilliant place financially as rent has gone up. I am a teacher and have an additional weekend job to try and boost my income. The default is for £4000 and I have around £5000 of other debts but I have been making regular payments/overpayments to all besides the default. Most of the debt is from needing to buy food ,etc. on credit cards to survive at university and some was my exes expenses. I am up to date with all utilities, rent, council tax, etc. and have never missed a payment.
I have paid off around £4000 of debt in the last few years and really want to sort this default somehow as my credit score is just depressing! Plus the other debts are high interest so I am making overpayments as much as possible but even with two wages I am very much living in my overdraft due to making these payments.
I am at the stage of starting to think of houses with my partner and although we have a strong combined wage and he has good credit, my score is naff and I don’t want to ruin our chances.
Sara (Debt Camel) says
1) you do not want this default changed to a payment arrangement.
As I said in my previous comment, with a default your credit report will be clear in 2025. Although you may feel upset at the way it was added, this is now the best option for you. So if you talk to the bank now or in the future, do NOT ask them to change the default to a payment arrangement.
2) you have other expensive debt – clearing that is more important
You are not being charged interest on this and you are not even being asked to make a payment arrangement.
And your credit score will not improve if you start to make payments to this. – it is a very stupid system, but those are the rules.
3) it is possible you may never be contacted about this debt again
I don’t like suggesting this to people, as for most people hoping that a lender has fogotten about you is almost certainly going to fail.
But in your case the lender is a bank, they knew you had mental health problems, and they havent contacted you for years, and seem to have lost the account. So is possible that they decided the debt was uncollectable and you will never be asked to pay it. This isn’t certain, and I can’t say how likely it is, but it is a definite possibility.
4) So where does this leave you and your hopes for a mortgage?
It seems to me that a practical way forward is to concentrate on clearing your other debts now. And if the bank or a debt collector pops up and asks to you pay this debt, well at least the other debts will be lower so it will be easier. Once the other debts are cleared, you can start saving up some money that you could pay to this debt in case you are contacted.
If you have no contact before May 2019, your credit record will be clear. Even if you can repay this debt in full immediately, your credit score will still be damaged until May 2025. What timescales are you thinking of for a mortgage?
You should make sure that the bank has your current address.
Michelle says
I have defaulted on my account in 2021, but the account status shows open with defaults recorded each month? The original date when you look at the record states 2021. Why is the account still shows open when it’s defaulted? Why is it showing defaults each month? Thanks
Sara (Debt Camel) says
The account shows as open as it has not been settled.
The extra defaults each month look dreadful, but only the first D is counted by the credit scoring algorithm. This is just what happens with defaults.
William says
Hello
I have a credit card default from 2020 when I was originally furloughed then became unemployed due to vulnerability during the pandemic. The credit card company sold the debt on to a debt collector who wrote the debt off after my medical evidence was produced. This debt still shows on my bank account credit file as a default under the name of the original card lender. Is this correct or should it be showing as a written off debt?
Thank you
Sara (Debt Camel) says
The record for the original lender – does this show as having a balance owing?
Is there also a record for the debt collector?
Richard says
Hi Sara,
Hope you’re well.
I first defaulted on a loan back in October 2018 and enrolled in a DMP shortly after having been made redundant during that period. My understanding is that at around October 2024 this would have drop off my credit file, being six years from my first default. In July this year, I was fortunate to receive some money which I used to settle this loan with the company, and it has now been marked on my credit file as such. However, I noticed with both credit agencies (Transunion/Experian) that they will continue to report this until July 2029 (six years from the date of settlement). My question is, have I made a mistake? as if I had just waited until October next year, or shortly after, this would not have shown on my credit file, and now by paying it off early, it will show on my file for another six years, effecting my ability to apply for a small mortgage in a few years time. I initially thought adverse accounts recorded get removed from the date of first default and not another six years added from the point of when settled/satisfied. Any clarity appreciated.
Sara (Debt Camel) says
It sounds as though the lender never added a default to your credit record, so it showed as a payment arrangement or missed payments. You need to ask the lender to add a backdated default, see https://debtcamel.co.uk/debt-default-date/
Hayley says
Hi, I have a default on an unsecured loan.
The lender recently contacted me as they realised they were charging interest when they shouldn’t have been when I was using a debt management company so instead of the 20k I owed it is now 16k (to an address I asked them not to use due to privacy issues). They have also since written to advise that my debt will be sold onto a debt collection agency if I don’t get in touch by 18th October (this was sent to the correct correspondence address).
The default is approximately 4.5 years old.
I did write to the lender over a year ago as I believed they irresponsibly lent the monies to me and at the time I suffered with depression and also couldn’t afford the loan if they looked at my finances, they would have seen I was regularly consolidating debt and increasing loan amounts etc..
I tried to make them a settlement offer. This was rejected.
Do you think it’s worth making another offer? Or wait until it goes to the DCA and maybe make them an offer? I can now afford to pay a substantial amount to clear this debt. Or shall I just set up a payment plan until the default is 6 years old?
I don’t want to risk a CCJ and would like to at least try to improve my credit score in the hope that I’ll be approved for a mortgage in the future.
Thank you.
Sara (Debt Camel) says
Can I ask which lender this is? And how large an offer you made them?
What is your realistic timescale for applying for a mortgage?
Hayley says
Hi, the lender is TSB and I would be looking to potentially apply for a mortgage with someone who already has a mortgage within the next 3 years or so
James says
Hi I had a joint loan with a partner who entered into a trust deed she was advised it would not affect my credit rating. But the bank put a default on the loan even though I have been paying the loan payments in full myself and never missed a payment . Now my credit rating is bad and I can’t get any credit .is it possible to have this default removed from my credit rating?
Sara (Debt Camel) says
she was advised it would not affect my credit rating
I don’t think you should have been told that – as you had a joint product, your accounts would be linked and this would be visible to creditors checking your records.
the bank put a default on the loan even though I have been paying the loan payments in full myself and never missed a payment
this does not sound right though. I suggest you send the bank a complaint – if you tell me which bank i can give you an email address for complaints. Say no payments have been missed so it is unreasonable for a default to appear on your credit record – ask for it to be removed.
Let me know what happens?
James says
It was royal Bank of scotland loan
Sara (Debt Camel) says
email customer.relations@natwest.com, Put “Complaint about credit record” as the subject line.
Mike says
Hi ,
During 2020 , I lost my job and went through a very difficult time mentally for matters I do not want to disclose on here. I had a student/graduate account with RBS with an overdraft limit of £2000. It is at this time RBS decided to close my account because they have made a “commercial decision” and therefore demanding the £2000 back ASAP. During this time I made a big mistake and ignored all the letters as I wasn’t in the best position mentally and financially. RBS subsequently put a default notice onto my credit file. During the first year of the default account I managed to pay £700. After this I have not paid anything for the past 2 years. So i currently owe them £1300.
I am looking to get a mortgage within the next 1/2 years. I’ve had very bad credit in the past but i am trying to build it back up. My question is firstly if I do not pay anything else on the account , will the default become a CCJ and then this would last another 6 years ? I DO NOT NEED THIS AGAIN!!!!
My second question does the default account need to be settled for at least a year before i should apply for a mortgage ?
Should I even touch the default or just hope it disappears after 6 years? What’s the best approach? Now i am in a position I can pay it back in full if required.
Thanks in advance !!!!
Sara (Debt Camel) says
If I do not pay anything else on the account , will the default become a CCJ and then this would last another 6 years
A default doesn’t automatically become a CCJ but it’s very likely that RBS will at some point sell this debt and the debt collector that buys it will go for a CCJ if you do not set up a monthly payment arrangement.
The chance of this debt just dropping off your file and also being statute barred so you can’t get a CCJ is low – and this will be even smaller if your credit record is improving!
My second question does the default account need to be settled for at least a year before i should apply for a mortgage
Yes unless you are happy to get an expensive “bad credit mortgage” which I do NOT recommend. You cannot be sure you can remortgage cheaply in a few years. Many were badly caught out by this in 2009-12. And many more are finding this out in 2023 at the moment.
The longer this default has been settled, the more high street lenders may be prepared to consider a mortgage application. I suggest you clear it straight away.
(I can’t tell from what you have said if you have any reason to complain to RBS about how you were treated in 2020. But if you think You do, you should still settled the balance now in my opinion. )
Catriona says
Hi
I have a defaulted account on a Sainsbury’s account . For 3 years Sainsburys have sent this now to a collection agency . I pay 50 pounds a month do I have to keep paying and if I pay what happens after 6 years . I don’t want court etc to afraid . Also can you advise what you should I do about the debt collection agency ?
Sara (Debt Camel) says
This was a loan? How large is the current balance?
Do you have other debts as well?
Catriona says
It’s 1400 k and yes I have other debts but managing to pay them . I’m a nurse this one was forced into default after Covid
Sara (Debt Camel) says
ok have Sainsburys sold this to a debt collector or just passed this to a debt collector to collect on their behalf?
£50 a month will clear this in just over 2 years. Is the £50 affordable?
Catriona says
They have been passed it on . 50 pound a month over 2 years sorry I missed a 0 it’s 14000 apologies
Yes 50 pounds ok but it’s defaulted what way does this work then if I haven’t paid it all off
Sara (Debt Camel) says
they have been passed it on
that isn’t clear. Who is the debt collector? what did the letter from them say?
ok £14,000 is more of a problem. Was this a loan? how long ago? Were the repayments too high from early on or was it OK for a while?
Your other debts – how large are they?
Catriona says
Hi
I have 7k in other loans and then 6k in credit card . My default loan is approximately 14000 this is defaulted from . The debt collected is PDCS. It’s in default from 2020 I think . They told be I could take a break I did and extended it and when I went to return to payment they defaulted me . I don’t know what to do next .
Sara (Debt Camel) says
Can I ask what the interest rate was on this loan? What was it for? I am interested in whether you may be able to make an affordability complaint about the loan.
The other loans – what interest rate? Are you paying Interest on the credit card debt?
A default hurts your credit score. It doesn’t mean you are about to be taken to court providing you keep paying. But £50 a month is going to take decades to clear the debt…. Will you be able to increase this amount when the other loans end?
Are you still Using the credit cards? If you are, cam you stop?
Catriona says
Hi
I don’t know how much interest on this loan but I can find out . The other loans are at 21 precent . Credit card already have stopped using . What happens to my defaulted loan after 6 years ? I will find out the interest in defaulted loan .
Thanks for your help
Sara (Debt Camel) says
What happens to my defaulted loan after 6 years ?
It drops off your credit record but is still legally owed. If you stop paying you can still be taken to court at that point.
So there is little point in trying to get through to the 6 year point – your situation doesn’t change much at that point. i think you should talk to a debt adviser about your options for all of your debts now – phone national Debtline on 0808 808 4000.