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
Naomi @ The Skint Dad Blog says
This is a really interesting post and a topic that I don’t think too many people really think too much about when they are trapped in debt. I kept just thinking that I didn’t want a loan or a credit card so it wouldn’t matter. It didn’t dawn on me that it may affect my chances of renting or buying in the future either.
We are making agreed payments (we’re snowballing) on a monthly basis but my file still shows as defaulted (I’ve only been checking on one report – not on all of them).
My credit score is now my financial aim, it will just take a long time to get there.
Jack says
Thanks for this. I think I’m going to have a go at ppi – it would be sweet revenge to use that money for a settlement of some debts.
Alan Lewis says
Hi, can you clarify something please?
I had a £33 default in January 2012, it was satisfied in June this year?.
I can see a big line of ‘D’s on my credit file from the 2 dates.
Will my credit rating recover in January 2018 or June 2021?
Everything else is clean on my file.
Thanks you
Sara (Debt Camel) says
Hi Alan, the debt will disappear from your credit record in January 2018. You credit score may improve slightly before then, but the big improvement will come when default vanishes.
M Stone says
Hi, great to find your helpful article .
I’ve just discovered a default for £500 on my credit report. I didn’t know it was there until 4 days ago but apparently its been there since 2014. Back then I had a dispute with that bank since, when they first informed me that the account was overdrawn, I discovered they had been charging a minimum pay in fee (not an overdraft fee…. I mean a fee for not putting money in monthly) I’d never agreed to such a fee (although they now just say ‘its in terms and conditions) i was never aware of it and I considered that monthly fee partly responsible for going overdrawn. So I complained and as far as I was aware we were waiting for some resolution.
The bank claim they sent letters and a warning of default but we didnt get any. What we have been getting is statements from that bank showing 0.00 … So we assumed it had been written off following our complaint. But… Apparently not! And the statements of 0.00 are from a different account with them BUT we’ve never opened another account with them (this is another shock I only found out today). They even tell me I opened it in a town were we’ve never been in a bank… It’s all a crazy mess. I’m utterly confused and distressed. Anyway the bank refuse to remove the default.
I can complain to the FOS but that may or may not help get it removed… And I urgently need a loan (which is why I looked at my credit report), so waiting for the outcome of a complaint is not ideal.
I could pay the defaulted amount off now purely to improve my score… If it would help my chances of a loan (my credit report is otherwise all clean) … But I’m not sure if a settled default would still prevent me getting a loan?? And… Does a settled default look like an admission of fault??
Not sure what to do for the best, it’s hard to get answers even from my other bank who I have a clean 40 year record with (I asked them if I’d be able to get a loan) so if you have any advice I’ll be very grateful.
Sara (Debt Camel) says
I think you should put in a complaint to the FOS as soon as possible. First about the fee you weren’t aware of, second the banks failure to communicate properly about the problem and the default and third about this other account, which sounds very odd!
I suspect paying the balance would make it look as though you accept it. A You could perhaps add a Notice of Correction to your credit file saying that you have only just become aware of the default and you are disputing the alleged debt with the Financial Ommbudsman – here is how to do it with Experian: http://www.experian.co.uk/consumer/faq/AR5.html.
M Stone says
Thank you Sara
I put a notice of correction on earlier today after citizens advice advised the same. On that note I must say I’ve been very disappointed with Experian who were not interested when I called them and didnt even mention putting on a notice of correction. Lord knows why I’ve been paying Experian a fee per month for years… First time I need their help and I got none.
Yes FOS is next. I’m just so tired of phone calls and mails now.
I’ve also asked for copies of all bank records from the offending bank including copies of agreements with my signature.
Thank you for taking the time to help… After days of banging my head against the brick wall of uninterested people in call centres your help means a lot.
Holly says
I have just recently downloaded a credit report check, my score is 491- which I know is bad!!
I’m only 23 which is a negative, I have a argos card which is in default of £299 I am paying £30 back a month which should be cleared in just under 10 months. I have a loan which I am paying back (this isn’t in default) but missed a few payments and repaying extra a month. How long will this take after I have paid these debts off say I give myself 12- I8months when would this start to improve and would it be 6 six years until it’s cleared? I’m going to want to buy a house is say 10 years time I don’t want anything to kick me in my teeth, my aim is to clear these debts after having a rough year after moving into a property on my own.. As a single parent WORKING!
Sara (Debt Camel) says
Hi Holly – plenty of people your age are getting deeper into debt but you are tackling your problem which is great!
The Argos card will drop off your credit record 6 years after the default date. The effect of the default will reduce before then.
The loan will drop of your credit record 6 years after it is repaid – it sounds as though this will be well before your “10 year house” plan.
In a few years time I suggest you get a credit card and use it every month and repay it in full every month – this will help your credit score improve even faster.
Best of luck!
Adam says
I have a Default from 3G phone company for £20. The default drops of in May 2016. My credit score is around 570-600 with the default (How much better will my record be without the default). Should i just wait for the default to drop off. Or pay this £20 which this company decided was a good sum to default me for? They have never contacted me about it, i wanted to buy a house and saw this on the record, i rung up and they said they will not remove it etc etc….
Sara (Debt Camel) says
Hi Adam, if you pay the £20 now, it won’t be update your credit record for another few weeks. If the record is dropping off in May, it hardly seems worth it. The default dropping off will give the big improvement.
Asad says
Hi Sara
I want to ask i have 2 defaults on credit report from British Gas,1 for electricity and 1 for Gas which is £844. I asked collectors for settlement figure they said u can pay £590 and after couple of months your credit history will be improve. is that a good dession?
Any advice would be great.Thanks
Sara (Debt Camel) says
Hi Asad, you need to have it in writing that this money will be accepted as a full and final settlement and they won’t sell the remainder of the debt on, see https://debtcamel.co.uk/debt-options/less-common/full-final/ for details.
Yes your credit record will improve slowly as the defaults get older. It won’t improve massively or very quickly because the default will still be on your records for 6 years from the default date, but getting the debts marked as partially satisfied with a zero balance owing is better than an unsatisfied default for many lenders.
Louise says
Hi Sara,
I have just checked my credit file and I have a pay day loan on there from 2012 which I have defaulted every month, it is for £100. A few years back I took out a debt management plan and have since paid all my other debts off (if i remember i had this loan i would have added this too). My question is.. if i ring and call to pay the loan off will the default leave my credit report in 2018 or 2022??
Sara (Debt Camel) says
It will leave in 2018 :) But don’t offer to pay it in full – they will probably be very happy to accept 50%!
If you had a lot of payday loans, have a think about how “affordable” they actually were, or whether every loan really made your position worse… If it did, then look at whether you can get a refund for “unaffordable” payday loans, even the ones you repaid in full on time: https://debtcamel.co.uk/payday-loan-refunds/
Dena says
Hi there
I have a debt of 6500£ and my acccount went in default October 2015. I was looking to settle it all this month. How long until my credit score would go good again????
Sara (Debt Camel) says
As this article says, the effect of a default gets less as it gets older. And many lenders will prefer to lend when defaults are repaid fully.
Jac says
Hi Sara,
Firstly thanks for all the advice you give it’s brilliant.
I had a default on my file in June 2010 for £22.00, I paid this July last year once I was notified (not sure why it took 5 years to notify me)
I have two credit cards which I pay the full amount off every month and have done for the last 4 years but due to the 69months that the default has been on my file I’m classed as a poor payer. Which I think is a bit unfair considering I didn’t know about the £22, and it is the only time I have ever had a default. Will this default disappear this year?
Regards, Jac
Sara (Debt Camel) says
Hi Jac, this default will disappear in June this year. At that point your credit rating should improve a lot!
Jac says
Thank you Sara, that does put my mind at rest.
This is a fantastic site, the best one I have found for straight forward advice, and extremely prompt replies from yourself. I will be mentioning you to my friends and family if they are ever in the need of help.
Robs says
Hi I want to remortgage but have debts, two of which have defaults against them although I am paying them back at an agreed sum every month. If I paid all the debts in full will my credit score improve. I’m aware that the default will stay on my file for six years. Is it best to pay those not in default and will this help my score improve or will it not matter because of the defaults.
Sara (Debt Camel) says
hi Robs, you might like to read this article about getting a mortgage when you have debts: https://debtcamel.co.uk/mortgage-with-debts/.
You will struggle to get a remortgage if you have defaults which haven’t been repaid.
Darren says
Thanks for the article, it’s good help
So I had a credit card with Barclaycard which I took out in 2002 which went into default in 2012 (£784.00) and was subsequently sold to two credit agency (currently with Robinson Way who took this over September 2015)
I didn’t know I had this until yesterday when I got a free credit report as I’m looking to get a mortgage later this year, so this puts me in a difficult position. so yesterday I called DCA and paid off £84 to get the file moving, the original debt from Barclaycard is showing as default/settled and the current debt from Robinson Way is showing as default, ideally I want to get this removed and apply for my mortgage but this is a stumbling block, is there anyway once it’s paid off this default can be removed?
If I push DCA and the Barclaycard can I get this taken off my credit score? my current score is 407
Sara (Debt Camel) says
It’s good you are checking your credit file now, not after you put in a mortgage application!
You haven’t given any reason why it was wrong fro a default to be added. Without this it is very unlikely it will be deleted I am afraid. the best you can do is repay it as fast as possible so at least it is showing as having been settled a few months ago on your record when you apply.
Sarah says
Hi,
I defaulted on a loan in 2011 and have been making payments since then. I have just finished paying off the balance. How long will it take my credit to recover. Is it 6 years from the date of the default or the date of the settlement? When I look on my credit report there is a long line of D’s on the account.
Thanks
Sara (Debt Camel) says
Hi Sarah, your problem loan will disappear from your credit record 6 years after the first default date. As the article says,, older defaults have less of an impact on your credit score but there will be a big bump up after the six year date.
David says
Hi, I have a default on my account from 2014, I am paying a debt collector £50 a month and due to finish in a few months, but the company on the credit file still show as I’m defaulting, even now.
where do i stand on this? am i really defaulting or will it stop showing once i’ve paid the collectors the balance?
Sara (Debt Camel) says
This is normal, only the first default really matters for your credit score. It will stop when the debt is repaid and the balance is zero
Martin says
Hi,
Im 27years old now and finally trying to get my credit rating up after spending money i didnt have when i was 18 and i now have a family and trying to buy a house.
I took out a credit card and it defaulted in sept 2010. I am slowly repaying it back now(and i mean slowly)as im trying to rebuild my credit score. So am i right in saying that this defaulted credit card will fall off my file in sept 2016. And will this start to make my score improve. I also have 2 other balances on my credit file which are outstanding but will be paid off in the next few months and then there will be nothing else outstanding on file. Will this also improve my score?
Sara (Debt Camel) says
Yes, your score will improve when the defaulted credit card drops off your file in September.
From the point of view of getting a mortgage though you must remember that it isn’t just your credit score that matters. Your debt level is also important, and the defaulted debt that is no longer on your credit record is still a real debt that matters for your mortgage application. You may find these two articles useful for thinking forward to a mortgage application: https://debtcamel.co.uk/dmp-mortgage/ and https://debtcamel.co.uk/mortgage-with-debts/
samantha says
Hi, myself and my husband defaulted on 2 personal loans three years ago, the loan amounts were 19,000 and 11,000.
We paid these loans in full 6 months ago and our credit report shows these debts as satisfied with a zero balance.
We have had car finance and mobile phones for 2 years which has always been paid on time. Our credit rating is still showing as poor. When will this improve?
We are now looking to get a mortgage this year. And we will be going through a mortgage broker for this. What do you think our chances would be of getting a mortgage? We both have professional jobs and have been employed with the same employers for over 5 years. And we have been with the same bank for over 5 years too.
Sara (Debt Camel) says
From this point on time is the great healer of poor credit scores and you should be increasing your deposit every month as well. If you have credit cards, use them every month and repay in full every month. Make sure you are on the electoral roll.
With the defaults being over 3 years ago when you apply for a mortgage you will hopefully be OK if your deposit and incomes are OK for the amount you want to borrow. See https://debtcamel.co.uk/mortgage-with-debts/ for details.
Marc says
I am six years into a DMP and have reclaimed my PPI which means I can now settle with all my. I have checked my credit report and only one lender recorded a default and that was on the 3/06/2010. Am I right in thinking that if i settle now then the default should drop off on the 03/06/2016 all be it with the 28 days they get for admin? as it would of anyway, I currently have 18k outstanding in debts and this will all be paid what effect would both of these actions have on my credit score as I am looking to move and need a mortgage.
Sara (Debt Camel) says
The debt that was defaulted in 2010 will drop off your credit record in Jun 16 whether you pay it or not. Paying it will not mean it stays on for longer, see https://debtcamel.co.uk/ff-credit-record/. Your credit score will improve a bit when this default disappears.
The other debts in your DMP are showing on your credit record as Arrangement to Pay or DMP or something similar? If so, when you settle these, the balance will be set to zero but the accounts will remain for a further 6 years, so the DMP markers will still be visible. Paying these in full will start to improve your credit score but not dramatically.
You may want to try to get default dates added for these, which may sound perverse but if the default dates could be on or before Jun 2010, then your credit file would then be clean by July 2016 – see https://debtcamel.co.uk/debt-default-date/. The problem about doing this is that a default date of later in the 2010 year may be added, which would delay getting your file clean.
You may find this article on getting a mortgage after a DMP useful: https://debtcamel.co.uk/dmp-mortgage/
Jonathan says
Hi I have been reading the thread with great interest and I wondered if you could be able to give me help on mu specific problem.
This month I had a ccj drop off my credit report (brill) I was expecting my score to dramatically improve but it didn’t. It has stayed exactly the same.
I do have one other default (untouched) from 2014 for £184.00 with payday uk.
Is it the default that’s keeping the score low ? and am I best just calling payday UK and clearing this ? To ensure it is marked as settled or with this not make much difference.
Or does it take time for your score to update once a CCJ has dropped of ?(it has only been a day)
Thanks in advance
J
Sara (Debt Camel) says
It may take longer for your credit score to be updated – but with a default in 2014 it is never going to get anywhere near good!
One option is to repay the other default. From that point your credit score will improve, not fast but as the settled default gets older your score will start improving slowly.
Did you have a lot of problems with payday loans? If you did, you might look at whether it is possible to claim a refund of interest and charges if the loans were “unaffordable” – see https://debtcamel.co.uk/payday-loan-refunds/. If you win a complaint about loans being unaffordable the Ombudsman will usually say that they should be deleted from your credit record completely. Having a CCJ on your credit file at the time you took the loans out will help the argument that they were unaffordable and the lender should not have made them
Heather says
I currently owe HBSC £1407 as an overdraft and £435 or so on a credit card; defaulted October 2012 and Jan 2013. Here’s where it gets sticky; I was out of the country so had them change my address so I got correspondence, subsequently took some “interesting” advice stating that they had to prove the debt was mine and wrote a series of letters to that effect (both to hsbc themselves and subsequent collection agents, they just kept selling it on).
Now I’m back in the UK, older and wiser, and I would like to pay these off or find some way of mitigating damage to credit score (534) but no idea who currently has the debt and any letters that DO go to the overseas address won’t reach me now since its my ex’s house. How on earth do I figure out who has it (shows on credit file as hsbc still), is paying it the right thing to do, should I partial settle if I get the option or go on a debt payment plan?
Looking to rent very soon because my 9 month old and I are currently at my parents house and there’s really not enough space but worried about being accepted.
Sara (Debt Camel) says
Good people to talk to about a debt payment plan would be National Debtline. They don’t run DMPs themselves, but with only one creditor you don’t need one – but you do (I think) need to talk through the details of your current situation and how it might change if you get a place of your own with a debt adviser who will be able to suggest what a sensible repayment offer would be. National Debtline: https://www.nationaldebtline.org/
How do you figure out who has the debt? Well first of all your credit record may help. Is the HSBC balance showing as zero? If it isn’t, then the debt may never have been sold on, just passed to debt collectors to try to collect and returned by them to HSBC when they couldn’t. If the balance is non-zero, phone HSBC up and ask if they own the debt? If it is zero, phone them up and ask who they sold it to.
But before you make the phone call think about the full & final settlement offer or the debt payment plan and how much you can afford. A settlement will start the process of improving your credit record, but it won’t be quick. A DMP and your record won’t improve until 2018/9 when the defaults disappear. But can you afford a settlement offer? If you want to move out then you need money for deposit, first months rent, possibly other things like bedding, kitchen equipment etc. You need to be realistic about what you can afford, your credit record isn’t the only thing that matters here.
Laura says
Hi Sara
I’ve got a defaulted balance with Halifax; date of default was Dec 2010 and have been making regular reduced payments. When the 6 years is up December this year there will still be a balance on the account. What would show on my credit file after that date; would the default still show as there is a balance outstanding, would just the balance show or would nothing show?
Thanks so much
Laura
Emma Smith says
Hi There,
I just wanted to ask how much difference it will make to my credit rating if I pay of a defaulted account in full. The default is less than a year old. Will it make enough of a difference to my credit score to make it worth paying it of early or is it the case that now it’s defaulted there’s no likelyhood of improvement for 6 years?
Sara (Debt Camel) says
It will make a small difference initially then as the default gets old it will make more of a difference. It’s a rough rule of thumb but lenders don’t like recent defaults and they don’t like unpaid defaults.
BUT the main reason to settle the debt isn’t the effect on your credit raating, it is because it removes any future hassle with the creditor or whoever they sell the debt onto. Once it is paid, it is dealt with, until that point you can be contacted, taken to court for a CCJ etc.
Emma smith says
Thank you!
Annoyingly the default relates to a temporary payment arrangement I had on a large loan when I was made redundant. I have since paid back the arrears and am back to paying normal payments within the original agreement but it looks like I have a defaulted balance of £12k on my credit report which is obviously resulting in a terrible credit rating.
Sarah K says
Hi everyone!
I’ve been studying my boyfriend’s credit report. He isn’t great with financial items! He has a super low credit rating due to a default on his account. The default was placed by a collection agency and totals £183 according to his report. Which I assume is £100 + Interest. The status says closed/non satisfied. So he isn’t receiving anymore defaults on this particular debt but he has no way of trying to improve his credit rating as no where will give him a credit card to even start trying to rebuild it. He has no other debt.
I’m trying to work out whether he should contact the debt collection agency and just pay the amount off. Otherwise it won’t leave his report until September 2020. Which is ages away and I would like him to sort this sooner!
I am asking as I don’t want to go contacting the debt collection people and reopening an old wound so to speak if paying it off isn’t actually going to help his credit report?
Thanks so much for any advice!
Sarah
Sara (Debt Camel) says
His credit score will start to get better very slowly when the debt is marked as settled. After three months he could try a soft checker that won’t leave a mark on his credit file.
James T says
Hi
I have have an ‘Arrangement to Pay’ date on one of my debts as part of a DMP but Ive asked them to change that to a Default Notice from that date instead as I intend to offer a F&F settlement and the DMP started two years ago so I want the debt to drop off in 4 years, not 6 after the F&F.
Is that the right thing to do?
Thanks
Sara (Debt Camel) says
Always a tricky call deciding between a default on your file for 4 years or a partial settlement for 6.
sharon says
I am still making regular payments on a defaulted account, when the account is dropped from my credit file after 6 years, which is about now, will I still make my regular payments?
Sara (Debt Camel) says
Yes, see https://debtcamel.co.uk/paying-old-debt/ for details.
Sarah says
My credit file is 357 !!! I have just paid off all 4 defaulted accounts and 2 CCJ’s. The only thing left is my mortgage, which has been in arrears (I’ve had a bad few years) but now has two clear payments and my current account which is in excellent order. How long will it be till I see an improvement in my credit score ??
Sara (Debt Camel) says
How long ago were the defaults and the CCJ?
Yogin says
I have have defaulted on 2014 the lender has said I can clear off at a reduced amount about £200 difference, as the default will stay on account for 6 years am I not better off clearing at the lower amount?
Please advise?
Sara (Debt Camel) says
It normally is best to take the offered lower amount unless you are going to want a mortgage very soon, in which case it may be worth settling the debt in full. See https://debtcamel.co.uk/debt-options/less-common/full-final/ for more about partial settlements.
Yogin says
No plan to take a mortgage so as I have already defaulted am I better off paying the reduced amount?
As will drop off in 6 years time anyways
Would you agree?
Sara (Debt Camel) says
Yes, but do read that link which talks about what you need the creditor to say in writing before you accept the offer.
Nicki says
Hi, I defaulted on a bank credit card in 2010 after a relationship broke up and my ex decided to spend on my credit card as payback (my fault as she had the pin code). As i didn’t receive the default notices until months after I moved out I was £4,000 in debt. Since early 2011 I have been paying the credit company who have my account £30 a month. My debt keeps being sold to different credit companies and I am worried if this will continue to effect my credit score? I know my 6 years default period is up this year and I am doing everything possible to build my credit rating. I have a mortgage now and I make monthly purchases with a credit card which I then repay in full every month. I am due to renew my mortgage this year and I would like to aim for a more favourable rate. I am considering offering a partial payment to settle the account but I don’t want to to do this if it won’t increase my credit rating – what would you advise?
Sara (Debt Camel) says
A partial settlement will slowly start to improve your credit score. Once the defaults drop off there will then be a big improvement.
The advantage of a partial settlement as first that it will stop the creditor getting a CCJ, which would make your credit score much worse and second that you won’t have to tell a future mortgage lender about the debt, see https://debtcamel.co.uk/dmp-mortgage/ for details.
Hasnara begum says
Hi there
I really need some advice regarding a 22,000k personal loan I defaulted on September 2014. The debt did end up with Debt collecting agencies and when I finally got around to calling one they couldn’t find the debt. Anyway I found out recently it is with the original creditor, my bank. I called the bank repayment services and said I will come back to them. I wanted to get a mortgage and I now realise this will be almost impossible or just very expensive at 7% rate.
I realise I have no choice but to wait 6 years but in the meantime do I try and pay it off? If I try to pay back now monthly a sun will it mean the debt won’t disappear after 6 years? I Obviously want to avoid CCJ!
Sara (Debt Camel) says
If you start repaying the debt the default will still disappear after 6 years.
You need to do this if your aim is to get a mortgage. If you don’t, you may well get a CCJ in a few years because a debt of this size isn’t going to be overlooked.
And you need to repay the debt in full before a mortgage application. If after 4 years it is down to say 12k and drops off your credit record, the debt still exists and needs to be declared when you apply for a mortgage… See https://debtcamel.co.uk/dmp-mortgage/ for details.
Hasnara says
Hi again
If I have to wait this long 6 years (it will be two years in September 2016 since default) I can try and offer the bank repayment services a monthly payment to really try and reduce the debt to as little as possible by the end of 6 years. Can I ask the bank about not going for CCJ if I keep to repayments etc? or this is not a done thing? What do I need to be asking the bank when discussing repayments on a defaulted account? would they update my credit file to show I am paying a particular sum say for eg £400.
This would be the best course of action right to try for a RTB mortgage in 4 years? or perhaps try for a mortgage before the 6 years knowing I have reduced the debt to half?
Thank you!
Sara (Debt Camel) says
If you can offer £400 a month the bank will be happy and they are very unlikely to go for a CCJ or to sell your debt onto a debt collector. Your credit file will show the balance is dropping by £400 a month.
I suggest you start the payments as soon as possible and then think about a mortgage in a few years. Most lenders want you to have repaid a defaulted debt in full and £400 will be a chunk out of your monthly income so would affect mortgage affordability calculations… But there isn’t much point in worrying about this now, you just need to get yourself on the right track to getting a mortgage.
Matt says
Hi,
Are there any other stages within a default period in which they have less of an impact on my credit score?
I have two defaults on my profile, one from June 2013 and one from December 2010. I’m currently trying to get a mortgage and have been told that I should be able to get accepted at the end of June this year. Will the June 2013 default have a lessened impact when it ages to 3 years?
thanks,
Matt
Sara (Debt Camel) says
The idea that there is a single credit score is a myth – each lender calculates their own. A few mortgage lenders don’t mind defaults over 3 years old that have been repaid. Others will refuse you with a settled default that is 5 years old.
murat says
Hi,
I have just read the postings on this thread, I am in a similar situation as some of the people here so wanted to share and would be great to hear your feedback/ experience:
I applied for a mortgage a few weeks ago, although I had the top score from Experian, it got rejected at underwriting. I was not a member of Equifax and Call credit, nor heard about these two, so immediately got my credit reports from these two companies. What I found out was that there was a BT bill from 2012 about 61 pounds that was marked as a ‘defaulted’ credit agreement. No other report shows this and I was not aware at all of a BT bill as such. I suspect this bill that they sent fell to a period when I moved flats therefore it was not forwarded to me.
Dealing with BT has been another problem, because the account was closed and reported to Equifax, no one can explain this amount to me as to what it was for ( I had BT for 4 years, and I changed addresses in the second year, they could have contacted me for this bill!). I paid the bill 3 weeks ago, and further problems arose with them such as ‘ that bank has cancelled the payment, they did not receive any payments’ etc. I made a second payment, they again said bank cancelled the payment. The bank confirmed they have released both payment. Today they acknowledged the first payment, updated the account as ‘paid’ and they will be reporting to Equifax.
I am quite disappointed by BT’s attitude for 61 pounds and I have been red stamped for a bill that I did not receive or know about.
I will be formally writing to BT, Would complaining to FOS help?
The next step is the Equifax score, the team there says the score will improve, but reading from your threads, does the score get properly up to date in 6 years? Even the payment is done now, does that mean it will show up as settled but the score and history won’t improve?
Current credit report shows ‘poor’ repayment skill due to this bill which was outstanding since 2012(!)
Thanks a lot,
Murat
Sara (Debt Camel) says
Repaying it will help your credit score. The debt will disappear in 2018, 6 years from the default date.
You should put in a formal complaint to BT. But you can’t go to the Financial Ombudsman, there is a different Ombudsman for telecoms issues.
You should also talk to a mortgage broker who may be able to finder a lender that doesn’t care about this small problem years ago.
Ahsan Malik says
Hi..
I’ve 6 defaulted accounts – All are unpaid at the moment with £6100 outstanding balance in total.
I called experian customer services and told them i will pay off in full end of this month hopefully and if it would increase my score?
He said. It won’t effect score at all. It would come off from your account in 2020 OCT and then only your score will increase?
My debt collector is also agreeing to give me 1000 discount and pay off 5100 as partial settlement but at the same time, i’m looking to get mortage as soon as possible too.
What shall i do?
My experian score is 585 out of 999.
Thanks
Sara (Debt Camel) says
Repaying the defaulted accounts will start the slow process of increasing your score, but it won’t be complete until the debts disappear 6 years after the default dates.
If you want a mortgage, you have to repay these debts as soon as possible. If you do this now, it may be possible to get a mortgage in 2017 – some lenders don’t mind repaid defaults if the default is more than 3 years old and the repayment was more than a year ago – ie you have had a year with no credit problems on your file.
The tricky part is whether to accept this partial settlement. Some lenders prefer you to have repaid in full – it’s hard to tell whether saving £1000 on the settlement is worth the fact the debts will be marked as partially settled rather than fully settled.
JulesU says
Just wondering if you can offer some advice? I have a CCJ that was issued on 03/01/2012. I thought I had paid it off but apparently not and it is still active. Obviously this will disappear in a year and a half, but I was wondering if it would make any difference to my credit score if I paid it off now? In other words, will my credit score go up if it’s paid or just stay the same?
Sara (Debt Camel) says
If it is repaid, you can ask for the court to mark it as “satisfied” see http://www.trustonline.org.uk/understand-judgments-fines/ccjs-and-county-courts/certificate-of-satisfaction-satisfied-vs-unsatisfied-ccjs. A satisfied judgment is better for your credit record, but it’s never going to get to “very good” until the CCJ drops off after 6 years.
Your credit record is not the only important thing here. Until the CCJ is repaid there could be further enforcement action such as bailiffs which would add a lot to your debt.
NB it’s worth double checking so you are sure it is correct that you haven’t repaid the debt.
Lisa Sullivan says
Hello,
Im paying defaulted accounts a token amount of £5.00 a month and they are due to drop off in approx 2 years.
Should i be able to get a morgtage after they drop off if i continue paying?
Can i stop paying completely after they drop off?
What would be my best course of action to try and get a mortgage then? Defaults drop of in 2 years and I’m trying to currently re build with credit cards such as capital one.
Sara (Debt Camel) says
“Should i be able to get a mortgage after they drop off if i continue paying?” Probably not – these debts still exist, see https://debtcamel.co.uk/dmp-mortgage/
“Can i stop paying completely after they drop off?” Not a good ideas- see see https://debtcamel.co.uk/paying-old-debt/
If you want to get a mortgage, you need to settle the outstanding debts – full and final settlements may help see https://debtcamel.co.uk/debt-options/less-common/full-final/
LAM says
Hi All,
I got in to a cycle of taking payday loans from 247 Moneybox (I know, I know, how silly of me).
I recently lost my second income and so contacted them straight away to make a payment arrangement as I wouldn’t have the funds to repay the loan in full on it’s due date – we agreed £50 per month until the debt was cleared (£720).
The repayment was originally due in full on April 7th 2016, and the payment arrangement was set up for the 27th of each month (beginning on April 27th 2016). I made this payment as agreed.
Today I have received a Default Notice from 247, and I am wondering
1) Can they Default me even though I am in a payment arrangement and have stuck to it?
and
2) I thought Defaults would only be registered when the debtor reached 3-6 months of arrears? (technically, I’m only 1 month in arrears if the loan was due in full on April 7th?)
I am also unable to access my online account with them now – no idea why!
Can anyone give me any advice on this? I really don’t want a 6 year Default on my file
Sara (Debt Camel) says
1) yes
2) true, but this would just delay the default by 2 more months which won’t really help you
BUT … have you read my article on payday loan refunds? https://debtcamel.co.uk/payday-loan-refunds/ ? If you have been in a cycle of borrowing – repaying – re borrowing very soon afterwards then you may have a good case to argue that the payday loans were “unaffordable”. In which case you may be able to get a refund of some of the interest you have paid and problems wiped from your credit record. Worth a try?
LAM says
Hi – thanks. I will read that article.
If I juggle things and with the help of family I think I could pay this off in full within 3 months. If I do this, then could I challenge the Default for being issued too soon? Or, alternatively, if I say to them they have Defaulted me too early and wait for a new one in 2 months then I’d have a further 28 days to pay off the account from the date of the new/second default, meaning I would still pay off the account in full and so the Default couldn’t be registered on my credit file. Is either of those an option?
Thanks
Sara (Debt Camel) says
Although the ICO guidelines say 3-6 months, these are guidelines and it’s not possible to be very precise about them. If you pay the debt in full now, then then you have a good case to ask for the default to be removed.
After another couple of months its much fuzzier. And if you ask now for the default to be removed, this doesn’t happen immediately – in fact if it has to go to the ICO it will take several months.
Mark says
I had a current account with Nationwide and became overdrawn by mistake by £32 and they added more and more charges as they do so that the debt rose to £300. This was back in 2014. They outsourced it to various DCA and subsequently defaulted me the same year. I am trying to improve my credit file and contacted them to dispute the charges and they have offered a settlement of £52 and will wrtie the rest off. They will notify the DCA too and record it as satisfied on my file. Taking the morals to one side is there any benefit to me settling so far down the line? I don’t think you can get a default removed so really wanted advice on whether their offer is worth taking?
Sara (Debt Camel) says
they are pretty much admitting they made an error by making this offer to you. I think you should therefore ask for the default to be removed.
Peter Edmunds says
Hi iv got a ccj that expires on 1st September 2016 and I’m currantaly paying it off every month I haven’t missed a payment for over 4 years on my morgage credit cards and iv paid up finance on car up early and paid off one of my credit cards and I’m never late on payments but when I checked my credit score it was saying very poor how can I get my score better it’s on 533 at the mo will it go up after 1st Sep
Sara (Debt Camel) says
Your score should go up quite a bit in September when the CCJ is no longer shown (it doesn’t actually expire, CCJs never do, but it will disappear from your credit record.
Before then, have you closed the credit card that you have cleared? See https://debtcamel.co.uk/close-unused-credit-cards/? Are you on the electoral roll, see http://www.experian.co.uk/consumer/questions/electoral-roll/electoral-roll-4.html?
Peter Edmunds says
No credit card hasn’t been cancelled yet and yes I’m on electoral role
Sara (Debt Camel) says
Well cancelling the credit card may help a bit, but I think waiting till the CCJ goes will be the biggest increase.
Sam says
Hi,
I currently have two debts with DCA and wanted various advice if possible.
1. I have one debt with Lowell (£300)-EE and one debt with 1st credit (£1000) – Halifax. On my credit report Halifax have reported the debt as satisfied (current balance zero) can 1st credit pursue this debt, seems its been written off? (EE have not record a default only lowell, so seems they passed the debt on).
2. Is there any circumstance that I can pay the debt, in full, and have the default removed by the dca (in terms of completely removed from my account before 6 years). The reason for the defaults was I was not physically able to make payment?
3. The default dates are in 2012 and should be removed in 2018? I paid 1st credit for a year and I believe that debt will now fall off in 2019 though?
4. If I pay the debt in full today, will the default turn to satisfied (on my credit report will show was defaulted and paid in full) and will the whole account fall off in 2018 or now be extended for another 6 years to 2022.
5. If paying the full amount what are the kind of key things I should look for from the dca for example update credit file, dont pass the debt on, mark account settled in full etc
In short I would like to pay these debts, in full as partially satisfied can look worse than a default from what i have been told, but I dont want to be penalized for doing so e.g. the account stays on my file for another 6 years or the dca does not update the debt etc. and perhaps im better just waiting to 2019 and hoping they dont take me to court.
Thanks for you help
Sara (Debt Camel) says
I don’t think Halifax have written off the debt – it sounds more like they have sold it. It is usual for a creditor who sells a debt to mark it as zero owning as the new creditors (1st credit) will add the debt, so the first one needs to say zero owing otherwise it would look as though you owe twice as much. If this is right, then 1st credit can pursue this debt.
Can you explain why you were not physically able to make payment?
Debts fall of 6 years after the default date whether you have paid them fully, partially or not at all.
Tam says
Hi I have 2 defaults on my account I’ve paid them both in full will they be removed or stay for 6 years?
Will my credit rating start to go up now it’s been paid, I’ve applied for a credit card too try and help improve it?
Sara (Debt Camel) says
they will stay for 6 years from the default date, not the date you paid them.
Your credit record will improve but it will be a slow process and it will never get to Good until the defaults fall off.
Tamsin says
Ok it is a long process then one has 4 years left on it and the other 2 years, everything else is fine on there at least they aren’t ccjs I suppose
Sara (Debt Camel) says
That is exactly the right attitude to take – by clearing them no hassle from debt collectors and no chance of a CCJ.
Sol says
Hello,
4 years ago I defaulted on a Lowell account. It says default balance of £22 on my credit report so I assume that is how much I owe them. I have no details of this account and have no idea on how to repay it. Also, it’s been 4 years so have 2 years to go til it disappears from my credit report. Do you think they will chase me and issue a CCJ for £22? Or does the £22 only refer to what I initially owed them and now it will be much more?
Many thanks, Sol
Sara (Debt Camel) says
For a debt of £22 it seems best to ask Lowell what the debt is for and if you agree you owe the money, pay it. It is unusual for a debt collector to be able to add interest to a debt.
Helen says
Hi im hopeing for some advice im currently trying to clear my debts that iv been paying for over 11 years.iv paid off 3 debts now and only owe 1300 to arden credit i offered them a settlement payment of £500 which they declined so im now just paying £20 a month.this debt is due to drop off my credit score in november this year but im hopeing to get a morgage.i dont know weather to just pay the debt off in full so its done or will this effect me getting a morgage next year if i dont? Please help
Sara (Debt Camel) says
When did you offer the full & final settlement? Have you read this: https://debtcamel.co.uk/full-final-settlement-rejected/ ?
If you pay the debt, in full or partially, it will still drop off your credit record. If you don’t, the creditor may go for a CCJ (though that’s unlikely). You want this debt settled, in full or partially, before you apply for a mortgage, see https://debtcamel.co.uk/dmp-mortgage/
Janet says
I tried to apply for a current account today only to be told that l had bad credit and was declined. I have checked my credit on Expedian and l found out that l owed £16.50 to a mobile company that l cancelled 10 months ago. I phoned them and paid this straight away. How long will it take for my credit rating to go back up? This is the only debt I had.
Sara (Debt Camel) says
I am afraid the default is going to show on your credit record for 6 years from the default date. Your credit score will improve slowly, but won’t get to very good until the default disappears. Annoyingly your credit score will improve faster if you have some debt that you are paying off, so if you really don’t have any other debt at all, you may need to get a “bad credit” credit card and use and repay this every month – be careful with these, see https://debtcamel.co.uk/bad-credit-cards/ for the “traps” to not fall into.
Steph says
My partner had cancelled an account with EE in 2012. For some reason my partner has 6+ months of unpaid bills, even though he had cancelled and paid them off at the time. Naturally they did not advise us of these alleged outstanding funds and so a defaulted account lies on his credit file. After being advised to pay it off, and he did despite it not realistically being owed, his credit score decreased. We are trying to get a mortgage. Can you please explain why?!?!
Sara (Debt Camel) says
There is no reason why repaying a defaulted account would make your score worse. It may be some temporary glitch that will improve next month or it may the a sign of something else wrong with his credit record.
Regardless of this, no mortgage broker actually uses the credit reference agencies scores, they calculate their own, so small changes in CRA scores are pretty irrelevant.
Now you have repaid it, as the default was a while ago you need to talk to a mortgage broker about finding a lender that doesn’t mind this old default. See https://debtcamel.co.uk/mortgage-with-debts/
TJ says
Hello, I recently went to apply for a mortgage and thought best to check my credit score beforehand. Noodle gave me a score of 633 (out of 700 I think) and 5/5 rating. Just to double check my accounts I also used checkmyfile to see callcredit and equifax comparisons. On this website my score was very poor as I noticed a defaulted Halifax account from over 5 years ago with a balance of £706. I remember arranging to pay off this account and did so at the time before changing banks, however have no evidence of this. I have also not been contacted in the past 5 years from this bank with regards to the account or supposed defaults. It also only shows up on equifax and not call credit or noodle. It states that the 6 years will be up in 2 months time. Do you advise that I hold off and wait for it to be wiped with the risk of a CCJ being filed or dispute the account with the risk of me then having to pay off money that I do not owe to the best of my understanding?
I have checked equifax and experian directly and my defaulted account shows up on both sites.
Any advice would be greatly appreciated.
Thanks
Sara (Debt Camel) says
This is odd – there does seem to be a chance that you haven’t been chased as they too thought the balance had been paid so it was never sent to debt collectors.
It is however possible you will be contacted in the next two months though, see https://debtcamel.co.uk/no-calls-or-letters-about-debt/. Some debt collectors do leave this very late.
I guess it depends on how desperate you are to proceed with a mortgage application now, rather than in 3 months time. If you are happy to wait, well you have the deposit for the house so you can pay a CCJ within 30 days and it will disappear from your credit file, if the worst happens.
I think it would be good to try to get hold of your old bank statements that prove you paid this amount though.
Stephanie says
Hi,
I have a 2k defaulted account with Cabot, I would like to start paying off as my credit is low and I need to improve this.
If I get a settled payment for this will that have a negative effect on my score if it is not paid in full?
While I’m paying this off will my score go up?
The default date is 2013 so does that mean in 2019 it will be cleared even if I have paid off before?
Basically I got these charges when I made stupid mistakes at University with overdrafts and credit cards, now I’m paying for it now but would just like some advice on the best option to get rid of this! :)
Thanks!
Sara (Debt Camel) says
Your score isn’t going to get better just because you start paying it. And yes it will disappear in 2019 even if it isn’t fully repaid. BUT see https://debtcamel.co.uk/no-calls-or-letters-about-debt/ – as that says the real reason for starting to pay the debt is that it makes getting a CCJ much less likely, and a CCJ would wreck your credit score for another 6 years!
Tony N says
Hi, I have a default on my credit report for around £700 which has just appeared, the default should drop off next April (6 Years) and it has recently made my credit score go down to “Poor”. If I were to pay this off in full, would this have a “Positive” effect on my score due to being “Satisfied” or would nothing change?
Sara (Debt Camel) says
Read https://debtcamel.co.uk/no-calls-or-letters-about-debt/ – as that says the main reason to repay a debt (I am assuming that you agree you owe that amount of money) is because if you don’t the debt collector may take you to court for a CCJ, which would wreck your credit record for another 6 years.
Laura F says
Hi,
I have fairly recent defaults due to a change in my circumstances (not long after getting a fairly decent score from some horrendous choices as a student). I have around £2835 left that I am paying monthly DD’s to credit collection agencies.
I know I wouldnt be mortgage worthy, but when you say the score will go up slowly, how much would it generally go up?
I was hoping it would improve enough so that I can get a credit card at some point in around 6 months or so just to get some (healthy debt) to help with the situation. I have also looked at a credit improver package that you have to pay £15 a month to help improve your score. With my current situation would you say that was worth it.
I wish I could pay it all off in one go but I physically can’t and it’s getting me down now.
Sara (Debt Camel) says
[edited] See this article on Credit Improver: https://debtcamel.co.uk/credit-improver/
Manni says
Hey
I need some help. I want to apply for a mortgage but I’m on a dmp for the last 8 years. I have a loan showing on my credit file as a 6 across the board and I have another account with a default that had a date of 2011.
I want to know whether it’s better to pay off the loan with the score of 6 now and then apply for a mortgage. My mum has said she will help me pay if off its 5k. If this loan was paid then i would have 2 years left on the plan
I will be applying with my husband for a mortgage as our joint wages show that we can afford a house but it’s my credit file that is an issue. Are there any lenders that would consider my case. I have never missed a payment on the dump.
Sara (Debt Camel) says
You need to read this article on DMPs and mortgages: https://debtcamel.co.uk/dmp-mortgage/. Your credit record isn’t the only thing that matters, the remaining debts in the DMP also do even if they aren’t showing on your mortgage.
Jordan says
I got defaulted september 2015 over £250. I’ve checked on equifax and credit expert and its the only thing that is red everything else is green, if I were to pay this sum in full, would the default be removed from my credit file? Im abit stuck on this because i dont want to ask the company so they just get the money, and i was to still remain with a default on my credit file .
many thanks
Sara (Debt Camel) says
No, paying a default doesn’t remove it – but it’s still a good diea as the article above explains! It is unusual to be able to get a default deleted, see https://debtcamel.co.uk/get-rid-of-a-default/
sim says
Hi, I need some advice .. I had an account which went into default in Feb 2014, the debt got sent to an external debt collection agency and I paid the debt collection agency the full amount which was owed. Once I paid the amount in full I stopped receiving letters from the bank and the collection agency about the matter. I recently checked my credit report and it was showing that i still owed the full amount (of which I had already paid back in 2014). I rang up my bank and they said on their files it is showing that I still owe that amount.
Since it was a couple of years ago I cant find all the correspondence but I know definitely that I paid the amount off. Should it still be saying that I owe money on my credit report if I have paid it all off? I’m not sure what to do, will this effect the 6 year drop off? or my credit score in anyway? and what should I do about the amount still showing that I am owing (but have paid).
Sara (Debt Camel) says
The balance on your credit report should show as zero if you have paid it off.
It will still drop off your credit report in Feb 2020, but you can’t just wait for that to happen. If the bank thinks you still owe them money the debt is likely to get passed / sold to another debt collector at some point!. It is going to be easier to sort this out now than in a few years time. I think you need to look back through your bank statements and find evidence that you have paid this debt and show that to the bank.
Rob says
Hi,
I am in a position to pay my defaulted debt off now as a settlement, this will save me about £1,000. What is the implication to my credit score if I pay it all off now as a settlement or if pay it in full which may take me an additional few months? My understanding, is that a default is a default, so a settlement will be just as good as paying it off in full as it will still remain on my file for 6 years. Also, It has been 2 years since I defaulted will the six years begin once i have paid it off or does it begin simply from the start date of the default regardless of when it is paid off?
Thanks
Sara (Debt Camel) says
As the debt was defaulted 2 years ago, it will drop off in 4 years, whether you settle it partially or fully, makes no difference.
Some lenders arev more likely to give you credit if you have repaid defaults in full, but others don’t care. With these debts showing for another 4 years it is a hard call to say what you should do.
V A says
I entered a debt management plan that finished 3 years ago and am finally coming to the end of it in the next few months (default clearing wise) I have 4 accounts left where the 6 years is up so will then be removed. However, I have one account which is not showing as default, but is showing as settled in 2012 with a number of months having an account status of ‘3’ which I understand means payments were behind? Will this affect my chances of getting credit please? Will I have to wait for this to clear in 2018 before I can get credit again?
Sara (Debt Camel) says
Are you using and repaying any credit at the moment? If not – you may be worried you would be declined – you need to start so that when the defaults go there are some good positive marks on your credit file.
I suggest getting a “bad credit” card such as vanquis. These have DREADFUL rates of interest, but the aim is to use it each month for something small, say about £50, and then repay it in full and on time every month. See https://debtcamel.co.uk/bad-credit-cards/ for how to avoid problems with these bad credit cards. Having 6+ months of this will really help improve your credit score after the defaults go
All lenders are different so I can’t say you definitely will be fine, but I would be surprised if you then get refused a car loan. The “3”s are late payment indicators, a few 4 years ago is a pretty minor problem.
neal says
ok so i have two defaults on my credit file, one is from 02/2015 and the other is from 04/2014 (thats the first default dates of each) – now i know they are going to stay on my file for 6 years before they drop off, what i want to know is – would i be better paying them both off now so the balance shows 0/settled on them both as they are £210/£625 will that really make any difference to my credit score to pay these two off???
Sara (Debt Camel) says
After a year or two the two problems will be starting to look “old” as you will only have had positive markers being added for a year, no more Ds.
repaying the debts makes it more likley some lenders will give you credit and it also means you can’t get a CCJ which would be a disaster for your credit score.
Bradley says
Hi I’ve just checked my credit report to find I owe £139 to virgin and it’s on as a default it’s due to come off may 2017. As the amount is so small I’m looking to pay it off in full my score is in the fair at the minute will my score go up much once payed or will it stay the same until the default comes off. Also it’s saying I have default amount of £264 but I can only see one thing that’s there which is the above issue.
Many Thanks
Sara (Debt Camel) says
If that is the only default, there will be a big jump up in May 17 when it goes.
You will have to talk to the debt collector to find out what the current balance is exactly.
Kevin says
I was issued a CCJ via Cabot. The court agreed the two defaulted accounts would cost me £4.00 and £6.00 monthly direct debit payments. This all happened in November 2011, Cabot have continued to send me letters saying that I need to set up a new payment plan but basically I ignored these letters as I assumed all was taken care of due to the court appearance.
I recently registered with Noddle and to my shock the Cabot account had defaulted for the past 2 years????? So I did a bit of looking up direct debit payments from my account. To my shock I found that Cabot had stopped 2 direct debit payments last August and started taking a £7.00 payment from my account without my permission.
As far as Noddle are concerned that account has df written all over it but I’m still making a token payment???
Sara (Debt Camel) says
You need to ask Cabot why they have changed the direct debit without your permission. A creditor can get the monthly payment on a CCJ changed but they have to go back to court to do this.
Once there is a default on a debt, it is normal for a default to be recorded on the credit record every month, even if you are making the agreed payments. However I think you should check if the default date is correct, as this should be before the date of the CCJ, see https://debtcamel.co.uk/debt-default-date/
Ann says
Hi, I have 5 default accounts, ranging from original dates of default of 5/3/13 to 20/1/14 total owed is £5,500, plus one account which is down as AR for another £2,000 (this being the highest single amount). I have read the comments regarding the 6 years after which whether they are paid or not they fall off the credit record and the warning re CCJs towards the end of this period. I have been able to get together £3,000 to pay some off. Should I pay the highest one off, or the most creditors?
Sara (Debt Camel) says
I think you should consider make full & final settlement offers, see https://debtcamel.co.uk/debt-options/less-common/full-final/
Adam says
Hi,
I have an account that had the overdraft removed which put my account into debit. This in turn caused late/under payments over a period of 6 months. My account was showing as Delinquent not defaulted. On the 7th month I cleared the payment completely and it is no longer saying Delinquent. This has however dropped my score to a low score. I am now coming up to my 6th month with no missed payments.
Could you advise what impact this will have long term? Is this as severe as a Default account?
Thank you for any advice you can offer.
A.
Sara (Debt Camel) says
It’s up to each individual lender how they assess someone’s credit record, but I think it’s fair to say that most lenders don’t think this is as bad as a default.
Adam says
Thank you for your quick reply.. Will it have an impact on me reaching a Very Good score? As i noticed you mentioned that defaulted accounts wont reach a Very Good score for at least 6 years.
Best wishes,
A.
Sara (Debt Camel) says
The score you are quoted by a credit reference agency doesn’t really matter, what matters is how an individual lender you are applying to for credit assesses your application. And that may be different for different lenders.
Gary says
Hi, due to personal circumstances I contacted a DM company in 2011 in relation to outstanding debt. Shortly after I entered into a DM plan and have been paying religiously since then (£360 p/m). My debt has been more than halved in this time but when the 6 year default period ends next year, I will still have balances outstanding. I’ve obtained a credit card in the interim to improve my credit rating and pay this in full each month for the past 18 months as many forums advise. When the defaults drop off next year what impact will this have on my credit rating if balances are still outstanding?
Sara (Debt Camel) says
When the defaults drop off your credit rating will be looking very nice!
However, you still owe these balances, they will never become “statute barred” as you are paying them. If you stop paying them, a creditor may decide to go for a CCJ which will wreck your credit record for another 6 years.
If you are hoping to apply for some more credit, this will however be against the terms of your DMP … Also you are very unlikely to be able to get a mortgage as your bank statements will be showing the debt management payments.
Gary says
Many thanks. Fortunately I had a mortgage at the time and do not intend applying for credit any time soon, I’ve learnt my lesson with the focus on becoming debt free!
Jay says
I have depts to phone companies and PayPal due to stupid decision when I first turned 18 (beginning of 2016) I am now defaulted on all I understand it will be on me credit score until 2022 I want to start paying the debts back but are unable to due to being an apprentice and only earning £500 a month witch is spent completely on living I will be able to start paying around July/ august as my apprentiship finishes and I will be on more money is it worth informing the creditors of this ?
And what’s likely to be there reply if I do ?
Sara (Debt Camel) says
I suggest you tell them about your situation and offer a token £1 a month payment to each debt, see https://debtcamel.co.uk/token-payment-debt/ for details
Jay says
Thanks for the help just one more thing I’ve just checked my clear score about it says I’ve defaulted with car phone ware hose then it says that it has been settled yet I haven’t paid anything? Any reason for this ?
Sara (Debt Camel) says
It sounds as though the debt may have been sold to a debt collector. You need to look at your Experian and Call Credit records (see https://debtcamel.co.uk/best-way-to-check-credit-score/) for how to do this) as it may well be showing under a debt collectors name.
Danielle says
Hi there,
I find myself confused about defaults. I have been on a DMP since May this year to manage some default debts from 2013 when I hit a bad spot after a relationship breakdown and then buried my head in the sand. I am now in a position to clear it (£2000), the part I’m confused about is this. Would clearing the debt now add another 6 years to it showing on my file as it’s status will change to settled or will it still drop off in 2019? Any advice would be appreciated.
Sara (Debt Camel) says
If there is a default date against any debt it will disappear after 6 years if your pay it in full, settle it partially, start making low payments or don’t pay it at all. ie this debt goes after 6 years years no matter what you do. Of course the big advantage of settling it is that you can’t have a CCJ appear, which would be another 6 years.