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.
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.
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.
This article was originally written in 2015. It was updated in 2017 with the details of how Experian treats defaults as they get older.
Some debts Settled and some Satisfied – why?
Can you get a mortgage if you have debts?
FAQs on statute barred debt
Nick says
Hi
In 2014 I was in financial difficulty and had no option but to default on about £80K of credit cards and loans. In 2016 my financial circumstances improved significantly and in 2016-17 I was able to make final settlement of all but one of these with part payment of 35-50%. The exception was a John Lewis Partnership Mastercard debt of £9K where I contacted them several times in 2016 with a settlement offer, but heard nothing back. According to my credit report files this debt was marked as settled in 2016 so I did not bother chasing JLP further as I assumed that they had written it off.
JLP have now, 2 years on, written raising debt repayment.
My question is whether it is possible for JLP to do this after credit reports from all credit agencies have shown it as settled for the past 2 years? Presumably the agencies would only have done so on information from JLP?
Any thoughts much appreciated, thanks.
Sara (Debt Camel) says
Legally your debt still exists even if they made an error with your credit record. You could however put in a complaint to them saying they are not treating you fairly, point out you had no response to your emails/letters in2016 when you tried to settle your debt so you assumed that it had been written off as they changed your credit records to show it was settled. Attach copies of your 2016 communications and your credit reports to prove this.
Claire says
Hello
I have a recent default with TSB for £1006 I had opened a complaint with financial ombudsman who awarded £300 compensation however said the default was legitimate! I’m sure that the ombudsman said it was ‘better’ if we paid off the £1006 within 1 year of the date of default as it would have less impact on credit file, is this the case?
Sara (Debt Camel) says
Your credit score will not improve if the date is repaid earlier. BUT once it has been repaid there may be other creditors that are more prepared to lend you money – when making a decision on giving new credit, lenders use their own criteria, not the headline credit score.
Dean says
Hi Sara, I have realised that Barclaycard have charged me over £800 of interest between February 2013 and October 2016 when they passed the debt over to Link.
Recently I complained to Barclaycard as they had not added a default and they have kindly defaulted the account to March 2013. Is it legally / morally ok for them to charge interest and charges on a defaulted account whilst I am on a DMP? Barclaycard recently gave me a refund for around £100 as they failed to assist customers effectively in 2013, and they said that if I feltl that I deserved further redress I should contact them. So I have again written to Barclaycard with reference to this letter and copies of the statements showing the interest and charges. Also in 2016 they used quite heavy collection tactics, so I also referenced this as it caused uneccessary stress as I was clearly keeping up with my agreed DMP payments. What do you think my chances are of getting the interest removed from my debt? Thanks Dean
Sara (Debt Camel) says
I think it’s right to challenge the fact they added interest and ask for it to be refunded. See https://debtcamel.co.uk/creditor-wont-freeze-interest/
Dean says
Thanks Sara
John Heart says
Hi,
I’ve recieved a default notice from a loan company asking me to pay them £500 before the 19th October otherwise a default will be registered. I have rang them today and sorted out a repayment plan. I really can’t afford a second default (previous one now 2-3 years old), will this repayment plan stop the default if I stick to it or will I get the default unless I pay that amount by that date?
Sara (Debt Camel) says
Have you actually defaulted on this loan? how many months payments have you missed? The repayment plan – how large are these payment compared to what you should have been paying?
John heart says
I got a default notice in the post last week, stating that £500 needs to be paid by 19th October, I called them today and explained I could afford to pay the full amount outstanding. I’m about 5-6 payments behind, I should be paying £149 a month but have just agreed to pay the balance over 5 months at £179 a month (£1000 left on the loan).
Sara (Debt Camel) says
If you are 5-6 payments behind, then the creditor could add a default to your credit record now if they want – this has nothing to do with the Default Notice you have received, see https://debtcamel.co.uk/debt-default-date/.
But if you make the payments they may not – sorry it’s not possible to be definite,
Angeline says
I stopped paying to vodafone and now have a default. Account closing in 2017 now I need to get a joint mortage and my score is 250 which is very poor. What shall I do? As the mortgage company said the credit check would not let me get a mortgage but I can give a report to override it. But this report shows a £700 default for vodafone and a poor score.
Sara (Debt Camel) says
You haven’t said anything which suggests there is a reason to challenge the default. the best you can do is pay it in full immediately. If you do that you will still find it really had to get a mortgage at a half way reasonable rate for a while (see https://debtcamel.co.uk/mortgage-recent-defaults/) but the longer you delay settling the debt, the longer it will be.
Tina says
Hi, I have a default on my account from 2016. I have been sent a letter offering to settle the debt partially, reducing the payment of 80%.
How will this affect my credit, and will it impact the chances of getting a mortgage, or borrowing further, if i partially settle? Or its best to continue paying the full payments until i finish paying the debt?
the Default date is 2016, and the payment is £683.80 They are willing to write it off 80% of this amount, and that i pay £136.76 to clear the debt.
Thanks
Tina
Sara (Debt Camel) says
It won’t make a difference to your headline credit score if you settle the debt in full or partially. And the debt will disappear from your credit record in 20122 whatever you do.
A few lenders )including some mortgage lenders) may prefer to lend to you if you settle it in full though. It can be hard to decide if this is worth it…
If you can’t afford to settle it all but could afford the partial settlement I think you should definitely grab it. It is better to have a debt partially settled than still be repaying a defaulted debt.
And if you have other debts, it’s also probably better to take the partial settlement and pay off more of the other debts.
Tina says
Yes thank you very much. Very hard decision.
Alysha Lang says
Hi I. Have been given a default for a credit card in September 2018 I have now paid that in full, I no that it will be on my record now for 6 yrs, I was just wondering if I’d be accepted for car finance? My other car was on finance I paid that in full never not paying on time, will that go for me do you think?
Sara (Debt Camel) says
There is a huge range of car finance. From great 0% deals to paying more than 30%… you may be able to get an ok or even good deal but not the best. The longer you can wait before applying the better your chance of being accepted for an OK deal
Harry says
Ok so I have a few old defaults 3-4 years and I have been paying them £1 a month to keep them away.
Because I am making a payment to them does that mean it is a fresh default every month or the 6 years starts all over again?
Do I just stop making the payments after the 6 years? if I do, do they register a new default because I have defaulted on an agreement?
Sara (Debt Camel) says
You know you have defaulted on your debts, but have the lenders added a default to your credit records? The only way to be sure is to check, not assume they have! See https://debtcamel.co.uk/best-way-to-check-credit-score/ for how to check.
If there has been a default added, a new D (for default) is added to your credit record every month but this doesn’t mean anything – the defaulted r cord will drop off your credit record and not harm your credit score 6 years after the default date.
BUT this doesn’t mean you can stop paying at that point. Read https://debtcamel.co.uk/paying-old-debt/ which looks at this topic.
Catriona says
I have a default on my account related to a mobile phone company after taking out a sim only contract. The SIM never arrived and the DD did not get set up properly. I can’t pay the debt as I need to pass their security to do so. To pass security I need the SIM or a phone device make and model the SIM has been activated on. I went to the Ombusman, but was told my rights and the delivery being between the supplier and delivery company is not recognised by O2. I must find the undelivered SIM card.
The thing is, it is coming up for 1year since the contract started and the first “non payment” notification which was 14calendats days after I purchased the SIM contract online. It is 6months since the default notice.
How much trouble am I in? My credit rating is the lowest possible- but I can’t get the company to agree to respect my rights and their contract terms. Nor can I just “give up” and pay off the debt. There complaints are awaiting the 1 year anniversary and 18months stage- but they won’t tell me what they are going to do as their complaints department won’t allow them to tell me and won’t speak directly. (The front line staff and shop staff have been excellent and sympathetic trying everything they can think of to sort this)
Do you think this will end in a CCJ or worse?
Sara (Debt Camel) says
I think this is a consumer issue – you are being asked to pay for a SIM card that was never delivered. Go to your local Citizens Advice and ask for their help to resolve this.
Sara (Debt Camel) says
My friend Helen Dewdney, who runs the Complaining Cow website, agrees this is a consumer issue, see her article https://www.thecomplainingcow.co.uk/a-guide-to-the-consumer-rights-act-2015/ which covers your rights because the SIM was never delivered.
Catriona says
Helen has been fantastic. Her site is very enlightening and I am getting ready for my next attempt to bring sense to this situation with her site help.
Thank you.
Mark says
I read the quicker you pay a default the better, I went to work abroad and recently got my credit report to find out I have a old default from 2014 to Vodafone for £788 , if I pay it off is there still a chance I could get a mortgage or am I best waiting till next year when the 6 years is up?
Sara (Debt Camel) says
Definitely pay it off ASAP if you don’t want to be taken to court for a CCJ!
If your credit record is otherwise very good AND you have a very good deposit you could add a note to your credit record saying you were unaware of the debt and paid it as soon as you retunrned to the UK after x years (see https://debtcamel.co.uk/notice-correction-credit-record/) and talk to a broker now about the chance of a mortgage. If not an optimistic reply, wait until the default goes.
Robert says
Hi.
I defaulted to Scottish Power more than 5 years ago and have been informed today that the debt is now written off.
I’d like my credit report to show the default as settled / satisfied, since I intend to make enquiries about a mortgage this year, before the default drops off my credit report in Dec.
Seems unfair that I’m happy to settle the debt and am not permitted to do so despite it counting against me for another year.
Is there no way around this?
Thanks in advance
Robert
Sara (Debt Camel) says
Why has the debt been written off?
Sean says
I’ve just checked my credit report and there is default debt date from accounts opened in 2012 from when does the six years come into play from date of account open or from date of default
Sara (Debt Camel) says
From the date of the default.
Ben says
I opened a second account with tsb and asked for a basic account with no overdraft just to put £800 in and spend that only, after checking some letters the other day I’ve realised that I have gone £60 overdrawn on this account and extra charges have been added, There are numerous defaults on my credit rating now. I’ve worked hard for 5 years to save a deposit and was planning on getting a mortgage this summer but now I’m stuffed. I’m really worried I won’t be able to get these defaults removed, so far tsb have not been very helpful, any advice please thanks
Sara (Debt Camel) says
How long ago did you open this account? Did you go overdrawn or was this caused by any bank charges? Is this the only account that has a default on your credit record?
Lauren says
Hello. I have been paying link 1 pound a month for about 6 or 7 years.. it was a Barclays account that I closed due to sudden totally unreasonable account fees (6.50 a month to 67 pounds a month for having the same overdraft if had ever since university) so I closed the account and it went into default a very long time ago. On principal I really don’t want to pay this back. It’s 1300 pounds. However it still shows on my credit file as default because I’m still paying them a pound a month. Should this not have dropped off my record by now? Or am I keeping it there because I’m paying it? If I stop paying them will I get a ccj? How do I get them to write it off? It’s so outrageous that I just can’t bring myself to pay them after the way I was treated. But I don’t want tit hanging over me anymore.. any advice?
Sara (Debt Camel) says
My guess is that the account is not showing as defaulted on your credit record – it is either showing as an arrangement to pay or it is showing as 6 months in arrears.
Did you actually close the account or just stop using it? Is it still owned by Barclays or has it been sold to a debt collector?
Steve says
Hi
I have been paying numerous creditors via a DMP for quite a few years now and consequently the original defaults have now dropped off my credit file and my credit score is looking pretty good. I am now in a position to be able to settle or partially settle all of the remaining debts but I’m a little worried that once paid my credit file will be updated to show as settled or partially settled. Can the creditors add anything to my file once the debts are settled?
Sara (Debt Camel) says
No they can’t. See https://debtcamel.co.uk/ff-credit-record/ which looks at this issue.
Also read https://debtcamel.co.uk/settlements-old-debts-cca/ as these debts must be pretty old!
Andre Bidjeck says
Defaulted on 4th January. looking 4 ways 2 minimise impact.
Thanks 4 sharing yours experiences
Sara (Debt Camel) says
Hi Andre, it’s going to help if you can say some more about this default.
What sort of debt is it? Do you agree you have defaulted? Did you actually default a while ago but the default just has just been added to your credit record? Is this your only problem debt? Can you afford to repay it? Are you likely to want a mortgage in the next few years?
Amber Kay says
Hi,
I defaulted on a credit card account a number of years ago now, however, when checking the three major credit report companies, they all have different default dates for the same debt. Is this right?
Sara (Debt Camel) says
No! How different are they, a few days or weeks probably isn’t worth bothering with?
Craig Bartley says
If I had a default in June 2013 and paying an agreed monthly sum how why does it show default every month it was with Lowell?
in January I had a settlement figure and paid it shows as satisfied now but February it’s showing default after the date it was settled just wondering why if they can do this and who I can contact?
I understand it will be gone off my record in June does the missed payments stay on there the default is the only one showing missed payments for last 6 years even though I had an agreement with them
Sara (Debt Camel) says
Once a debt has been marked as defaulted, it will show a default every month until it is settled or until it drops off after 6 years.
“I understand it will be gone off my record in June does the missed payments stay on there ” are the missed payments before the default?
Jessica says
Hi, I have a default on all 3 credit reference agencies from Kapama. This is off the back of a loan from mini credit of £220 which I rolled over for months & months paying around £50 each time. Contacted minicredit to arrange a payment plan as i checked how much interest I had actually paid over the months and I was in shock so they charged me hundreds of pounds to arrange a payment plan on top of what I had already paid. I agreed as at least I was paying the debt back instead of paying interest every month and at the time I thought it was a better solution. I paid around £20pm for over a year then I finally snapped and cancelled payments and said that I had paid enough to them. They then sent onto debt collectors with a balance of £376 which I refused to pay and wanted to see the breakdown, which they never sent me. Kapama then have put a default on my account last year with a date of March 2014 which was 3 months after my last £20 payment. This is the only thing affecting my credit score. I have contact FO and they didn’t think I had a complaint against the debt collection agency as they bought the debt. Have you got any ideas of what I should do in this case. Do I just pay the debt and wait until it drops off. For a £220 loan I have probably paid back an incredible amount. I apparently still owe £376 and the default will drop off next March. Need advice.
Sara (Debt Camel) says
Have you asked Kapama for a breakdown of the account?
Q says
I have my university chasing me for fees from the last 5 years & 6 months (2013) for £8k via a debt collection agency (DCA). I didn’t take a student loan and thought that i could try pay it myself directly to the uni, but due to family circumstances i could no longer afford uni and family financial responsibility and dropped out in the first year (so no actual loan was taken). I’m not sure whether the university has sold the debt or simply passed the responsibility to the DCA as there is no record of this debt on any of my credit reports. As far as i remember i have never agreed or acknowledged to this debt/default(???) & have never communicated with the DCA despite their various attempts.
I have recently recieved a letter from the solicitors asking me to contact the DCA to make the payment and now i’m afraid of a potential CCJ.
My questions now are what do i do? what does it mean that solicitors are involved & what can they really do? i no longer even reside in the country so could the solicitors pass a CCJ despite no communication or my acknowledgement of the debt? or is it just an empty threat?
if i’m left with no option but to start paying small monthly payments to the DCA, will it affect my credit score as the actual debt is not on my credit score? would me accepting this debt & paying it off then automatically be applied to my score? and how would that affect my ability to get a mortgage in the future?
Sara (Debt Camel) says
I will make some general points, but you need specific advice on your situation. here is National Debtline’s page about UK debts when you now live abroad – that has a phone number to contact them on from outside the UK: https://www.nationaldebtline.org/EW/information/abroad/Pages/living-outside-the-uk.aspx
It is VERY likely that you have “agreed to the debt” because you started a course where there were fees you did not pay. You don’t have to “agree to a default” – that happens when you don’t make the contractual payments you should.
This sort of debt does not show on your credit record as it is not a consumer credit debt. In the same way a debt to a decorator or a garage would not show. If you repay this debt it will not affect your credit record. But if there is a CCJ that will appear on your credit record.
It sounds as though this debt is not “statute barred” (National Debtline can explain this) so it is likely that they could go for a CCJ. There are certain steps they have to take first – again ND can explain these. It is possible to get a CCJ when you are not in the country.
A CCJ will make it VERY hard to get a mortgage in the UK in the next 6 years even if it is repaid, unless you can pay it in full within 1 month of the CCJ being issued, in which case the CCJ will vanish from your record.
If you don’t intend to live again in Britain, you may not care what your credit score is.
Dean says
Hi Sara, just a quick one. – I had a default applied to a Barclaycard Debt dated 22/3/2013. This created 2 records on some of my credit reports. One open account with Link DCA which reported the balance reducing each Month but also a “settled” record (settled 2016 when Barclaycard transferred to Link) with a zero balance.
I have checked my Equifax report today and the Link Record has disappeared, but the Barclaycard Settled Record remains. I know its not 22/03/2019 yet but am I right in think that this will drop off after 22/3/2019? or do I have need to worry?
Sara (Debt Camel) says
No need to worry!
Dean says
Phew thank you Sara – i’ve worked hard for these defaults :-)
Richard says
Hi Sara,
6 years for a single default is so harsh –
I recently applied for voluntary termination of my car finance and as part of the voluntary termination a check was carried out on the car for any damage – long story short I received a substantial final bill which included the last payment, plus one more payment the finance company added on due to the car return dates being out with my control. In the end I was left with a large payment that I was unable to pay in one lump sum. I arranged to pay the final bill in three instalments and they still defaulted the account which is surely unreasonable. Is there potential for this default to be removed?
Sara (Debt Camel) says
If you feel this is unfair, send them a formal complaint saying why. Then if they reject that, send your complaint to the Ombudsman. Point out you paid within threee months of getting the final bill, if that is what you did.
Dean says
Hi Sara,
Last week I settled my next account with a 50% settlement discount – although this was a low value debt I was happy with the result as it was another debt cleared. This account defaulted in March 2013 and had recently dropped off my credit files. I checked my Equifax on Friday and they have changed the default date to August 2016 and has reappeared on my credit file. I have contacted them and hoping they will get back to me tomorrow but I’m anxious about this. Can they do this ?? On the phone that’s said they only have records back to 2016 but I have had the account since 2006
Thanks
Sara (Debt Camel) says
No they can’t. Once there is a default date added, it should not be removed just because you have settled the debt. If next do not correct this immediately put in a formal written complaint to them and take it to the Financial Ombudsman if they don’t get this sorted.
Dean says
That’s good news – thank you Sara – I recently won an ombudsman case – it took a year but got s great result thanks to your advice
Thanks again
Deborah says
I have a student loans taken out in 94 and I am in arrears they have now told me I have to pay the full amount or it will go down on my credit score can they do that ?
Sara (Debt Camel) says
This is an “old-style” student loan. If you are in arrears and not keeping to payment arrangements, it can be added to your credit records. See https://www.nationaldebtline.org/EW/factsheets/PDFs/42%20EW%20Fixed-term%20student%20loans.pdf and talk to National Debtline on 0808 808 4000 about what your options are.
James says
Hi
I have a default for circa £2k which is dated May 2013. I haven’t made a payment since or acknowledged it. The DCA hasn’t been able to provide the CCA. It has written to me with an offer to pay 10% of the debt to mark as partially satisfied.
Is this a good idea? Will it keep it on my credit report for longer if I make a payment as it is due to drop off in the next 6 weeks?
Sara (Debt Camel) says
This debt will drop off whatever you do. Whether you pay it in full, settle it partially or ignore it.
Has the DCA admitted they can’t find the CCA? How much is 10%? I normally suggest offering 5% or nothing… but it’s up to you if you are happy to settle this for 10%.
James says
Hi Sara
Yes – the DCA admitted last year it cannot locate the CCA. My only concern was that any payment could leave it on my file for another 6 years. Is this definitely not the case? If so, I’m inclined to offer 5%.
Sara (Debt Camel) says
it definitely won’t stay for another six years. See https://debtcamel.co.uk/ff-credit-record/
tina says
Hi
I have a 2 year old defaulted loan, still outstanding. If I settle tis debt at a reduced amount with the DCA that has acquired my debt, will the debt still drop off my file 6 years from default date? Or will it be 6 years from the ‘settled’ date?
Thanks
Sara (Debt Camel) says
6 years from the deafult date. See https://debtcamel.co.uk/ff-credit-record/
Emma says
Hi I had an outstanding debt on my credit file for Next. I stupidly buried my head in the sand and ignored it!!! When checking my credit file it states that an account has been removed and this was the Next one. I have not had any correspondence from them in over 3years. Are they able to still collect the outstanding debt of it no longer shows on my credit file. And do I have to declare this as an unpaid/outstanding debt of its no longer there? Also I do pay everything I owe now!
Sara (Debt Camel) says
When did you last make a payment to this debt?
Emma says
Stupidly stopped paying around 5-6 years ago when we had a lot of financial problems.
Sara (Debt Camel) says
If there was a default date on the record, then the debt would be deleted when the date got to be six years ago.
If the debt has been sold to a debt collector, then Next should have marked it as closed and the debt collector should add a new record.
A debt can still be collected if it isn’t on your credit record, see https://debtcamel.co.uk/debt-not-on-my-credit-file/. BUT if you aren’t contacted for a while it may become statute barred, see https://debtcamel.co.uk/statute-barred-debt/.
My suggestion is to keep an eye on your credit records, so you can see if a debt collector adds a record. Apart from that, wait until you are contacted. the longer it is, the less likely it is that the debt can be collected.
If you are worried, you could try putting some money aside each month for this – then if you are contacted you have a lump sum you could offer to settle the debt with. And if there is no contact for a couple of years you have a small nest egg!
Dave says
This is probably a silly question, but I couldn’t find an answer anywhere else.
Is it possible to request that a creditor re-open an account that’s already registered as in default on credit reports if the account holder can resume payments on the original terms (or a higher amount)?
Kind regards
Dave
Sara (Debt Camel) says
Are you hoping they will delete the default? When was the default added, what sort of account is this and are they still adding interest?
Dave says
The default was added about 6 weeks ago, it’s for a small loan (not a pay day loan) of £900. There’s no interest or charges added. I was wondering if it’s possible to have the default changed back to an open account so I can resume with the monthly payments? I had another debt (credit card) which was about to go into default, I spoke to the credit card company and agreed a monthly payment, instead of putting a default on my credit report they changed to the status to payment arrangement and advised they would change back to normal account status once the arrears are cleared. Would be interested to find out if the same could be done with a small loan that already has a default registered.
Sara (Debt Camel) says
Well I suppose you Dan ask, but once a default has been added it should only be removed if the original decision to add it was wrong.
Sophie says
Hiya,
I have a default payment from 28/05/2013 and am now looking to get a mortgage, if I was to pay the default in full would this reset the 6 year period or will the default still be removed on 28/05/2019?
Sara (Debt Camel) says
It doesn’t matter if you pay it in full, settle it with a partial settlement, starting making payments or ignore it, that debt is going to drop off at the end of this month!
So perhaps offer a full & final setlement? See https://debtcamel.co.uk/dmp-partial-settlement/
Steve says
I have settled two defaults that are almost years old. Need to apply for remortgage with over 60% equity and several credit accounts (incl mortgage and car finance) all up to date and have been for over 6 years. What do you reckon my chances are with 3 months before the last default drops off file ?
Sara (Debt Camel) says
“two defaults that are almost years old” should that have said almost 6 years old? how long ago did you settle them?
Are you simply trying to get a new fixed rate, or change your mortgage in some way?
Steve says
Sorry. Yes should have said 6 years old. Ones just dropped off (April). Paid two weeks ago. Other drops off in sept. Thanks.
Sara (Debt Camel) says
And do you just want another fix?
Steve says
I have two
Properties and buying them
Outright but paying one off interest only using an offset facility as one Is currently a buy to let.
So not asking for more borrowing just a better rate.
Sara (Debt Camel) says
Then ask your current lender – if you don’t need any changes to the mortgage itself, just a new fix, that may be easy.
If they don’t offer a good rate, then you may well do better to wait until the second default drops off in September and then make an application. If you don’t want to wait, you MUST go through a broker, and explain your credit report in detail.
Steve says
Thank you that’s very helpful.
Matt says
Couple of questions.
1) my partner had a default that was satisfied 4 years ago. I know the default should remain on file for 6 years but should they still be recording an (8) on the credit file every month since it was satisfied.
2) I have a large outstanding default from nearly 5 years ago, I have never paid anything or communicated in this time. What are the odds they would look to apply for a ccj this late?
Sara (Debt Camel) says
1) this debt will drop off 6 years after the default date that is on the credit record. Provided it shows a balance of zero now, that is fine.
2) Many people are contacted about paying a debt in the 6th year. And it is now harder to argue that a debt is statute barred. There were 320,000 CCJs in the first 3 months of 2019 – see https://debtcamel.co.uk/record-ccjs-q1-2019/.I can’t guess what the odds are, but it’s not safe to hope this one is going to go away.
Conor Hughes says
Recently had an account defaulted over an unreturned wifi box, resulting in a fee as small as £20, and because we moved out of the property and did not receive the letter to pay. The £20 has since been paid, is there any chance of the default being removed as it was for such a small amount and was more a misunderstanding?
Sara (Debt Camel) says
I think most people would say that is a very fair point. I hope you succeed with it but I am sorry to say I won’t be surprised if you don’t.
Conor Hughes says
If attempting to obtain a credit card, would there be opportunities to explain the credit score if supported with evidence?
Sara (Debt Camel) says
You can add a Notice of Correction, see https://debtcamel.co.uk/notice-correction-credit-record/. But it may not make a difference to a credit card application.
Conor Hughes says
Last question, thank you for the quick replies. Does having the defaulted account mean that there is zero chance of being able to obtain credit cards in the future or is it still possible? And if not what would be the best alternative ways of improving credit score?
Sara (Debt Camel) says
I assume you have paid the default. That doesn’t help your credit record but makes other lenders much more prepared to lend to you. When the default is over 3 years old AND has been paid more than a year ago you may be able to get a mortgage at an OK rate from a high street lender – really your credit score number isn’t as important as you think.
LOQBOX is a good way to help your score a bit without getting into debt, see https://debtcamel.co.uk/loqbox/. But until the default goes, your score will never get up to good.
You will be able to get a Vanquis or Aqua credit credit even with a bad credit score. horrible rates of interest. If you want to do this, you need to use the card for something small every month and repay it in full every month – that helps your credit score much more than having a balance and paying interest. And only get one of them, two isn’t twice as good!
David says
Hi
I was wondering what is the highest possible credit score with a default ? In 2016 I had a default recorded by Capital One. I have taken credit builder credit cards and have fully paid them each month. Credit limits on these cards have increased to about £3k on each (I have two). I also have a Halifax credit card which until recently was maxed out at £5k – I have also now fully repaid this card. My credit rating is classed as “poor”. Having now paid the Halifax card in full and now having no credit card debt (total credit card limits total £11k) should I see a marked improvement in my credit score ?. The default was for £11k and I am planning to accept a deal to settle at £3850 and this will be paid in June. I have never missed a credit card payment since 2016 so my recent payment history looks good.
Sara (Debt Camel) says
That default is still pretty recent, the harm drops as they get older. See https://debtcamel.co.uk/credit-score-change/. Also it will depend if yiu had missed payments or arrangements to pay on other debts.
David says
Thanks for the prompt reply. I hadn’t missed payments or came to arrangements on other debts. My credit report suggested the weak rating was because of high utilisation of credit card. I have now cleared that card completely. The other negative factor is the default which is just over three years ago. I was curious what the best rating that could be achieved with a default showing.
Nick says
David: For what it’s worth I defaulted on about £80K about 4-5 years ago with half a dozen lenders and negotiated partial final settlement of all debts at about 34% of the defaults 2-3 years ago. My credit score is now rated as good (4 years ago it was of course terrible) and I have £25K in credit lines if I want to use them, which I don’t. But I wouldn’t pay much attention to the credit scores. That good credit score won’t get you even a bog standard credit card as they don’t like defaults regardless. I use a private bank which has taken the trouble to understand my circumstances and history, and is very helpful, but apart from that in my experience it’s only specialised bad credit lenders like Capital One, Vanquis or Aqua that will offer credit cards if you have had a default, and any loan offered will be at extortionate rates. And I’m in the top 1% by income, with significant savings and investments. So if I were you I wouldn’t pay any attention to your credit rating score as it is pretty much useless for defaulters. 6 years after default you should be clean.
David says
Appreciate your comment Nick – it’s useful to know.
David
Nick says
No problem and good luck. Watch out in particular for sites like MoneySupermarket etc who are linked to the credit score agencies and will claim you have a 90% chance of getting a bog standard card on the basis of your score. In my experience if you have a default you definitely won’t qualify for these “90% approval” offers and are just wasting your time.
Matt says
Hi Sara
Just received this email from payday express. About trying to add a default date. Do you think this is a fair outcome or should I take it to the ombudsman now they have given me this decision.
Thanks
Matt
wish to clarify that based on your circumstances at the time and subsequent complaint that was raised your account never defaulted, no ‘Notice of Default’ was sent to you and consequently no default entry was recorded on your credit file.
As you correctly point out the guideline for a default is when you are 3 months in arrears, and normally by the time you are 6 months in arrears, however, due to circumstances at the time this did not happen.
Following your further contact on 3 May 2019 and complaint email received 16 May 2019 your concerns were referred to our Credit Bureau Amendment Controller who confirmed:
‘‘Whilst the loan was not defaulted on your credit file, our system will ensure that the entry is removed 6 years after the first date it could have been marked as defaulted’.
Sara (Debt Camel) says
I suggest you reply saying you are not clear what they are going to do, can they confirm that they are adding a default date, what that default date will be and when they will do this.
Dean says
Hi Sara, I recently won an ombudsmen case with creation – they had sold the debt to Lowell in 2016 but they have been marking the case with debt management and AR markers. Creation have asked Lowell to default the account dated January 2014 but Lowell are refusing to do this as they say they bought the account as non defaulted. This is going to ruin my chances of getting a high street mortgage in the future and I’m already 44 years old. Do you know why Lowell would refuse to do this ?? And any tips for next steps !! I have complained over the phone to Lowell but do I need to go back to FOS as my upheld complaint is not being upheld ? Thanks
Sara (Debt Camel) says
yes, go back to the adjudicator.
Dean says
Hi Sara thanks for the quick response – have you come across this before?? Thinking about it if creation admitted that a default should of been added jan 14 then the debt should have been sold to Lowell as a defaulted debt. As it stands I won the case but I’m still the loser in it all. Maybe creation could buy the case back from Lowell but would fear that they would still show AR markers on the settler Lowell account – sorry getting complicated and overthinking everything right now :-(
Sara (Debt Camel) says
Does the Creation debt show on any of your credit records? If you normally just check one and it isn’t there, check the others (see https://debtcamel.co.uk/best-way-to-check-credit-score/ for how to do this), it is going to help if the Creation debt is showing…
Dean says
No the creation debt is not showing on any just Lowell as up to date but with AR markers
Sara (Debt Camel) says
OK well there are lots of ways of skinning this particular cat. Creation could add the debt to your credit record with a default date in 2014 – then Lowell would have to copy that. Or Creation could buy the debt back from lowell, in which case it’s possible the Lowell debt should be deleted from your credit records. Or Lowell could stop being difficult and just add a default.
Dean says
Ok thanks Sara – so I have a chance of getting it sorted then? taken over a year to get to this point. Maybe I should stop having a meltdown and fight this next week. Have a lovely weekend and thanks again for your advice
Dean says
Hi Sara, Lowell have agreed to cease reporting anything to any Credit Reference Agencies for this debt – I have checked my Equifax and it has disappeared from my file. So is actually as good or better than a default dated 2014. Anyway if in the future i settled the account with an F&F settlement would they / could they re-report as partially settled? thanks again for all your help :-)
Sara (Debt Camel) says
No they should not do this. If you have it from them in writing that they will not be reporting the debt to CRAs, they should not change their mind.
Joel says
Hi Sara, I just have overr a month left on defaulted payment from July 2013 , I have not heard from the Debt collection company (Lowells) in years. I have not confirmed the debt or been in contact with them. I am aware the default will be off soon but I am keen not to be hot with a CCJ as I have moved address a few times from them. Should I contact them for partial payment though nothing has appeared on my credit statement with 2 months to go? I am keen not to get a CCJ if partial payment (full and final settlement) payment plan. Will it still write off my credit report if I agree to this s only a few months left , I am unable to pay a lump sum full and final but could do payment plan for the settlement figure. Should I request a CCA from them as taken out credit card in 2005?
Sara (Debt Camel) says
“Should I contact them for partial payment though nothing has appeared on my credit statement with 2 months to go? ” there isn’t an easy answer to that. If you can pay the debt relatively easily it would be a good idea.
It’s not always easy to get a debt collector to agree to a partial settlement payment plan unless you are paying quite a lot over a short period. The debt collector may just want you to repay the full amount or they will go to court.
For that old a credit card it is common for the debt collector to be unable to produce the CCA, which would solve this whole problem. But there is a chance they can find it.
Joel says
Thanks Sara
Apologies if my message was vague. Tho I only have till 11/7/19 when it would be six months on a original defaulted payment. I havent made any payment for 6 years or acknowledge the debt in this six years. I don’t want to be hit with a ccj right towards the 6 year limitation with out knowing as not at the address debt was registered at. Would requesting a cca be best thing to do in case they put in for a ccj. If not enforceable then only have a month for default to come off my credit score?
Sara (Debt Camel) says
Your message wasn’t vague, this is just a tricky situation. If they go to court – or you get get a letter from them threatening court action – asking for the CCA is definitely the right thing to do. (As well as defending the court case!)
The question is whether it is worth contacting them now to ask for the CCA. If you are happy to make a payment arrangement if the CCA can be found, that may be a good idea.
Joel says
Hi Sara
I have moved address a few times so won’t receive a letter from them at my new address. Debt is just over 3k and seen Lowell will wait to the point of 6 years of default.
I have seen the debt from past letters had been around 3 different debt collectors. So I didn’t know if you credit agreement would cover me and be unforceable if they can’t find it and the default is dropping off mid July this year.
Keen to have this off my credit report.
As I know they can’t contact me now I am conscious could get stung with a ccj all of a sudden.
Sara (Debt Camel) says
It is definitely going to go off your credit report. That doesn’t actually mean it is statute barred, see https://debtcamel.co.uk/statute-barred-debt/.
Your choices are to hope they don’t go for a CCJ and you pay nothing, risking an unexpected CCJ, OR contact them and ask for a CCA, which will mean you pay nothing if they can’t find it but have to make a payment arrangement if they do.
Joe says
Hi
I have 4 debts 2 credit cards with Barclays, 1 loan with Halifax and 1 credit card with Halifax.
Due to having surgery (cancer related), and the birth of a child I have had to take time off work, which has resulted in me being paid less; I am hoping to be fully fit and be able to work full time within the next 6 months.
Halifax have been very understanding and have frozen the account for 3 months, no interest or defaults and they will review my accounts and increase the freeze depending on my health
Barclays on the other hand have said that I will occur 2 defaults on my account.
The Question I wanted to ask is:
Can Barclays remove the default payment
How much of a negative impact would 2 defaults have on my account.
I am hoping to be healthy within the next 6 months and would want a mortgage in the next few years for a new property. I have never had any prior defaults or missed payments.
Sara (Debt Camel) says
Have Barclaycard frozen the interest on the account? How long is it since you first missed a payment?
Charlotte says
Hi
I had two settled defaults on my credit file from 2014. I assumed they were paid as they showed as settled but after digging a bit further they were settled as they were passed to a debt collection agency. I haven’t been contacted by the agency and nothing from them has been marked on my experian credit file but the amounts were still outstanding. I have now paid the amounts after contacting the companies directly but will this affect a mortage application?
Thanks
Sara (Debt Camel) says
Does the debt collector debt show on your Equifax or TransUnion (used to be known as CallCredit) records? here is how to check for free: https://debtcamel.co.uk/best-way-to-check-credit-score/
Charlotte says
Iv checked experian, noddle and clearscore and there’s no entries on any of them from the debt collection agencies just settled accounts from the lenders. The specialist bank we are using say they would ignore defaults 4 years old. Is it still likely to affect our application?
aaron says
Hi . I currently have a deafult overdraft with Halifax for £2000 . the defaults says it’s from 2016 but it’s a lot older than that anyway is it best to pay it in full to help my credit rating in the future . ? I’ve read that even paying it off in full wont help really.? please help !
Sara (Debt Camel) says
Paying a default won’t help your headline credit score, but may make it more likely that other creditors will lend to you.
It can be hard to say what a default date is for an overdraft if you just stopped using the account as there were no monthly payments to miss.
Kira says
Hi, I have many small defaults on my account. I get regular letters asking for payment, but never court threats. Lowell holds most of my debts now. I’ve noticed a few of these debts will reach thier 6 year time frame from default date in the next month or so. I can’t afford to be making payments at this time, nor have I made any payments since the default date either. Will those drop off my account when the 6 years is up, or will they continue to show? If they are deleted, it means I can concentrate on dealing with the last few debts on my account.
I’ve also noticed that I have 2 ccjs that I was not aware of, (I have received no letters, I’ve just seen them on my credit file), these are also reaching 6 years in a few months. Is there any point in paying them now?
Thanks
Sara (Debt Camel) says
“Will those drop off my account when the 6 years is up, or will they continue to show?” They will drop off.
“If they are deleted, it means I can concentrate on dealing with the last few debts on my account.” it is less likely that you will be taken to court if a debt has dropped off 6 years after a default but it is still possible. See https://debtcamel.co.uk/statute-barred-debt/. If you get letters threatening court, don’t ignore them, talk to National Debtline on 0808 808 4000.
“I’ve also noticed that I have 2 ccjs that I was not aware of, (I have received no letters, I’ve just seen them on my credit file), these are also reaching 6 years in a few months. Is there any point in paying them now?” CCJs don’t become statute barred, but after 6 years a creditor has to go back to court to get permission to enforce them, and this is nor often given. Again if a creditor pops up, talk to National Debtline.
Shireen says
Hi ,
My wife has default credit account on her credit report, which is we didn’t know about that as we never received any letter or phone or call , we thought we have cleared the payment with three network.
It’s only £70 , how can we remove this from the credit report.
Please help us as we have to apply the Mortgage.
Thank you
Sara (Debt Camel) says
You need to ask Three for details of the debt saying you dispute it as she paid the full amount. Until you have the details you can’t tell if she does owe the money.
C says
I’ve had an default for year issued by Halifax I pay £50 a month towards it. I didn’t pay may or April due to being emergency taxed and couldn’t afford to, however after checking my credit score I’ve seen these have been reported as late even tho it’s a default is this possible ?
Sara (Debt Camel) says
Yes, you think you “defaulted “ because you didn’t pay, and that is correct in normal English. But on credit records a default is normally reported until you are 3-6 months in arrears.
Kirsty says
Hi. Between 2-3 years ago I had around 9 accounts that all defaulted and were therefore sold to debt collection agencies. I have been steadily paying them off and most are now paid in full. My credit score is rising and is now listed as ‘fair’ on Experian but no mortgage providers will go near me because I have outstanding debt that have payment plans against them. I had been saving money to put towards a house deposit but it seemed a better idea to pay the debt off with this money instead. I don’t have enough savings to pay everything in full but have made settlement offers of which three have been accepted and paid. However now I’m worried as I have been reading that partial settlement can actually look worse than the default itself! Is this the case?
Sara (Debt Camel) says
“now I’m worried as I have been reading that partial settlement can actually look worse than the default itself!” that sounds like nonsense to me. See https://debtcamel.co.uk/dmp-partial-settlement/