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
Ella says
I have one default on my account Of 2000 but now I’ve been paying it’s gone down to 1000 it’s been less than a year but I want to get into buying and selling houses in about 4 years time if I finish paying off my default buy the end of this year would it put me in a better position for a mortgage in 4 years Please I think I am also on the Cifas for 6 years can my employers or anyone else see that
Sara (Debt Camel) says
Yes, paying off defaults helps with getting a mortgage later while the defaults are still on your credit record.
But you are going to find it very difficult to get a mortgage with a CIFAS marker. Lenders will see it. Employers won’t normally unless it’s the sort of job that runs a credit check on you.
Ella says
Thank you
What else does the CIFAS market restrict me from doing
It doesn’t show on my credit score on check my file
Sara (Debt Camel) says
Cifas markers tend to affect credit and insurance applications. It sounds as though you need to check if you are on the Cifas database, see https://debtcamel.co.uk/name-fraud-database/.
Sienna says
Hey I currently have 6 defaults on my account. They all accumulate to around £2000. I aim to pay this off within the next 6 months. Once all my defaults are paid off. Does my credit score start climbing? I know it takes 6 years for the actual default to come off my report, but does this mean my score will remain low for the next 6 years ?
Sara (Debt Camel) says
your calculated credit score won’t increase BUT there will be a lot more lenders who are likely to give you credit after all the defaults have been settled.
Mihai says
Hello. I have a default account . I paid it off in full last month . I had some problems and i could not pay in time so at the moment all my debts are paid . My score is poor . Will my credit score get better in the next 8-10 months as i will be trying to get a mortgage. Or will i have any chance of getting one?
Sara (Debt Camel) says
As the article above explains, paying a defaulted debt doesn’t improve your credit score. What was the default date for this debt?
Mihai says
I think it was July when i agree with them to pay less for 3 months after i ask for extra 3 month but paid it in full one month and a half before . I was paying less the usual but i was paying just ask for some time to get things sorted. So i started having trouble 5 months a go.
Sara (Debt Camel) says
So your problem was all resolved after one and a half months? Then you were back to normal payments?
mihai says
After the extra one month and a half i paid in full my credit. So yes i was ok with the loan paid everything i own them .
Sara (Debt Camel) says
Then I think you have a case to say that a default should not have been added, that you were only ever 6 weeks behind and then your account was brought back to what it should have been. Send them a complaint and ask for the default to be deleted and replaces by a “late payment” marker.
Sarah says
Hi, I took out an account with swimwear 365 in 2017 and thought I had a DD set up. I received some very standard looking photocopied letters from JD Williams relating to paying an account – but as I’d never heard of JD Williams assumed it was a mistake. There was no official notice of arrears or anything. I’ve since learned that they own swimwear 365. The account was only £150 but they’ve added a default to my account. I would have made payment if id been alerted to this in a clear way. Is there anything I can do?
Sara (Debt Camel) says
Have you gone back to your bank statements and checked the swimwear 365 account was not paid?
Nick says
Something worth bearing in mind about defaults and credit scores is that the bureau scores are almost irrelevant for most credit card applications. I had some defaults 5 years ago, all since settled, and my credit score has slowly gone up from very bad to good after 5 years of paying off cards in full each month. However, my experience has been that even with a “good” score no mainstream bank will offer credit while a default remains visible, so it is basically a 6 year wait unless you want a “bad credit” card or loan. Mortgage and personal loan brokers may be more flexible, but in my experience not the mainstream credit card providers.
Anita says
I have a default on my credit score in which the debt has been paid and the 6 years is up in January 2020 once this is removed will my svore improve emough for my creditors will give me a better rate.
Sara (Debt Camel) says
That depends on the rest of your credit record. if you have a lot of other problems, one default dropping off may not make a lot of difference. If this is your only problem you may see a big improvement.
Hannah says
i have a ccj that i haven’t been able to settle that is going to drop off my file this year (July) after this time, will mortgage lenders still be able to see this, or does it disappear for everyone? Understand they could potentially issue a new court order, but if they don’t…would they?
Sara (Debt Camel) says
Are you making payments to this CCJ?
Richard says
I am in the same situation making payments through Stepchange DMP. Interested to know if they vanish or if they are still logged in some way?
Sara (Debt Camel) says
It will vanish from your credit record, but you can’t stop paying as they could then try to enforce through bailiffs, deductions form earnings etc
The creditor that took you to court will still know about the CCJ from their internal records.
DF111 says
Hi, hope everyone is well.
Interested in some advice. I have four credit cards with total debt of £24,000. Due to health problems I lost work & accumulated debt.
I contacted all four lenders when I could no longer make minimum payments. My accounts were then held in the special cases team. Since then however, three lenders have marked defaults on the accounts & one lender has passed the debt on to Wescot.
My questions are:
1) Is it better to fully pay all debt off if possible? Does “partially settled” affect future credit scores / mortgage applications?
2) How do I pay the original lender without getting Wescot involved?
Many thanks for all advice.
Sara (Debt Camel) says
How long ago are your defaults? Are you now back at work with no health problems?
Martin says
Hi I just need a little bit of advice. I have 2 defaulted account both £1500 and I will be able to pay them off by the summer by paying £500 each month. I also want to build my credit score in the process. What is the best way to do this? Could I get a credit card and pay £500 to my defaulted accounts each month and repay £500 to my new credit card? Any advice would be appreciated
Sara (Debt Camel) says
If you have two unpaid defaults on your credit record, you would struggle to get a credit card except at a very high rate of interest. I suggest you simply repay the debts. Then later think about rebuilding your credit score.
Martin says
Thanks for the advice.
Will my credit score go up much by paying off my defaults?
Sara (Debt Camel) says
Not it won’t go up at all! But it may make lenders more prepared to lend to you and it means there is no chance of being taken to court for a CCJ, which would make your credit score go down.
How long ago are the defaults?
Martin says
The accounts went into default last year.
How much do creditors normally take off debt when you ask for a settlement fee?
Also once I’ve paid my accounts off would I be able to apply for a mortgage even though they will show up on my credit file. My credit score is sitting at 482 out of 700 on credit karma. I thought that was a pretty good score considering I’ve got 2 accounts in default but on the website it says it’s low.
Emmanuella says
Is there anyway to remove a Cifas marker
Sara (Debt Camel) says
Read https://debtcamel.co.uk/name-fraud-database/.
Kirsty says
Hi. I have a number of defaults on my credit file but I want to move house which would involve getting an increase on my current mortgage. All the defaults are almost four years old and all bar one has now been paid. Firstly, how likely am I to be accepted for a higher mortgage with my current high street lender. And secondly, I have the money to pay off the remaining default. Is it better to do this (will it increase my chance of a mortgage acceptance) or will it be better to keep hold of the cash to put towards the house deposit?
P Singh says
Hi There,
I have 3 defaults:
LLyods £1357 – Agreed to accept £678.50
Co-op £290 – Not spoken to yet about doing a deal
Tesco Mob £80 – Not spoken to yet about doing a deal
My quick question is that I have a little more income now and I can pay all 3 debts off in full if required (but would rather not!). Llyods have offered me a deal at 50% and the other 2 i have not spoken to yet. I only care about improving my credit file to get a mortagage for a buy to let property.
My quick question – Shall i pay all 3 off in full or shall I partially satsify as a full and final settlement? If I partially pay full and final whilst this clears the default notice off, will it still look “bad” to a future lender that I only partially paid the debt as opposed to settling the debt in full?
If it DOES make a difference then I suppose I would pay in full.
If it DOES NOT make any practical difference/ little difference I would rather do a partially satisfied deal with all 3 lenders.
Thanks for any help!
Sara (Debt Camel) says
It’s a difficult question. See this article: https://debtcamel.co.uk/dmp-partial-settlement/.
Richard says
I had a bad run and was irresponsible with money in 2014 september and october. I have a ccj which i pay off october 2020 and all my defaults drop off the same period how will this affect my credit score. Atm it is 498 am looking at buying a canal boat to live on within a year or 2
Sara (Debt Camel) says
Will you need any form of credit to buy the boat?
Are you making payments to the defaults still?
Richard says
Im paying off all the outstanding debts have just got a car on credit which toke a dent to my credit rating but needed it. I pay off all my bad credit by the end of this year and a few are done within the next few months and i will need a personal loan for about £20000 for the boat with cash put in myself
Sara (Debt Camel) says
ok, well you will find it hard to get a loan for 20k without a very good credit score, a decent income and having repaid all the defaults. but it sounds as though your credit score should get up to very good. Repaying the car finance will help after the initial hit.
Richard says
My last default was 2014 october how soon after that should i see my score improve i did a get ccj in 2018 june due to having to move very quickly due to suffering DV this is paid off in august
Sara (Debt Camel) says
ah. With a CCJ on your credit record it will never get up to good I am afraid. Clearing it is is good but it doesn’t actually help your credit score. You are likely to struggle to get a large loan until it goes in 2024.
Richard says
With the ccj being paid off in july august time will this improve my chances of getting the loan im happy to pay a higher interest rate. I am confused as i got a 12000 car on HP in march and have got a 2 credit cards since having the ccj. Onky use my credit cards as emergency amd pay it off asap use ine at a time
Will me paying the ccj off later this year help my score and i have got a credit card and 12000 car on hp since having this ccj applied. So asyou can see i am doing the right thing. I am getting the boat to live on full time aswell
Sara (Debt Camel) says
With the ccj being paid off in july august time will this improve my chances of getting the loan
Yes. few lenders would lend 20k when you have an unpaid CCJ! But that doesn’t mean you will find it easy.
What rate of interest is the car HP?
Richard says
22.3% apr and i wont be applying until all my defaults and the ccj has been paid off as im paying as much as i can to clear this thank you so much for your advice
Sarah says
Hi i have looked at my cerdit file. £
I have 1 ccj paid off recently but was put on in 2017. I also have 4 defaults one of these i know i make payments but, the other 3 i have no idea who to make payments to or how to begin to find out. There is also an account on it saying in arrears from back in 2014 i have no idea who this is for all it said is instant cash loans and when i look it up loads of places come up. I wish they taught us in school that this is what happens! At 20 years old you think all these loans are great! Now im nearly 30 partner wants to try for a mortgage but there is no way i will ever get one!
Sara (Debt Camel) says
there is no way I will ever get one!
Time is the great healer of credit records… you need to look closely at yours and work out when they will be much better. Repaying the debts will not by itself improve your credit score, you need to know the details and the dates.
The 2017 CCJ will disappear in 2023.
What are the default dates for the 4 debts that show on your credit record? Do make sure you check all three credit reference agencies, see https://debtcamel.co.uk/best-way-to-check-credit-score/.
And who are the current creditors as they may have been sold to debt collectors – it’s not bad if they have been sold, it is usually easier to get a debt collector to accept a settlement offer and some debt collectors may not have the right debt documentation so the debt may be unenforceable.
The Instant Cash Loans debt – this is probably a loan from the Money Shop, Payday UK or Payday Express – do any of those ring a bell? What does it say the start date of the loan was?
JM says
Hi,
I’ve been rubbish with money a few years back and finally got my act together… I want to get a mortgage next year and have the below. what’s best to settle first, does settling in full make any difference and am I likely to be able to get a mortgage based on the below?
Date of Default December 2018 – £2k settlement £1k to clear.
CCJ April 2017 figure £1k
Thanks,
JM
Sara (Debt Camel) says
re settling in full, read https://debtcamel.co.uk/dmp-partial-settlement/
But you will find it VERY hard to get a mortgage with a CCJ on your credit record, even a settled one.
Josh says
Hi,
I took out a loan with Barclays partner finance a few years ago and in 2017 defaulted on payments. At some point in 2017 I went on a DMP but after about 6 months payments were stopped at which point my remaining balance was around £260.
Fast forward to this year, I had a letter from Barclays a few months ago stating that they had closed my account. The balance on the letter said £0 and in the breakdown of payments it listed a credit for my full balance indicating that either someone had paid it (unlikely as no one knows my accounts), they had sold the debt on or they had decided to give up, clear my balance and closed the account.
I’ve not received any letters stating this has been sold on and no one is chasing me. I’ve checked my credit report and there have been no new accounts added (confirming it hasn’t been sold) and still shows as Barclays. The account however still shows as “In Default”.
Should this be shown as closed? If so then what are my best steps, do I report this to the credit agency or contact Barclays to get this corrected?
Sara (Debt Camel) says
Ask Barclays to correct it. There is obviously some risk that they may decide you still owe £260, but you can show the letter you had.
Mr L A M says
Hi,
I have a defaulted from March 2018 with BarclayCard. I believe this is an incorrect default as I only asked to make a late payment. They advised they will send details how to catch up on payments, I never received that letter and a few weeks after I was made aware of the default. At the time I had no idea what it meant and thought the account was just written off. I’m now in the process of applying for a new mortgage and this default is causing me a big problem as it is “unsettled”.
The question I have though is in the article above it mentions that they can refer to debt agencies after 5 years a few months. Is that a set rule or could they do it sooner? Is it also possible they might not even bother referring to a collection agency?
Sara (Debt Camel) says
oh dear. It is a shame you didn’t follow this up at the time. An unsettled default is a huge problem for a mortgage application.
The point in the above article wasn’t meant to say people are normally contacted after 5 years and a few months – it is to say that if you haven’t been contacted after 5 years you can’t assume you are safe.
Barclaycard can pass your debt to a debt collector or sell it at any point.
Laura says
Hi, I have old credit card debt where I have been paying £2 per month. The original default for these accounts have dropped off my credit record and I now have a really good score. What would happen if 1) I stopped paying the £2 or 2) I settled the accounts? Would they show back on my credit record and damage my now really good credit score?
Sara (Debt Camel) says
They won’t reappear on your credit record whatever you do.
But if you just stop paying, the creditor may go to court for a CCj which would be on your credit record for another six years…
Another option is to ask for a CCA agreement and only offer to settle if it can be found. See this https://debtcamel.co.uk/settlements-old-debts-cca/
Esther says
Hi I would really appreciate any good advice on this. My partner has a DMP through a debt charity that had been running since June 2015 with 4 defaulted accounts ( two defaulted in July 2015 and two in Jan 2016). We are desperate to get a joint mortgage and are on a super tight deadline here, otherwise it will be renting again for who knows how long…Have just been declined a mortgage with a high street lender due to his credit but also being told that the chances with the same lender would be increased if the DMP was closed. I have a funds to clear these debts in full and planning to contact the debt collecting agencies that are managing these defaulted accounts to do that. My question is whether there is any chance that they would cancel the default on his credit file if I settle the debt in full? (instead of DMP running for another 6 years) Or is that the case that if I pay these debts in full they will still keep those accounts in default for another year until it reaches 6 years? Any suggestions on how to improve his credit rating asap much appreciated. Many thanks
Sara (Debt Camel) says
but also being told that the chances with the same lender would be increased if the DMP was closed.
who is telling you this, a broker?
I should ask them to be specific – if you repay the debts in full what is the chance the mortgage will be approved now?
Otherwise surely your option is just to settle the debts and rent for another year until all the defaults go?
It is unlikely a lender will agree to remove a default if you offer to repay in full. And EXTREMELY unlikely that 4 lenders would all agree to do that.
Esther says
Thanks for your response Sara! Yes the broker is saying that. The amount outstanding on the DMP is quite high-Over £13K, we will still have enough for deposit and fees after paying this off. Just want to do this the best possible way to increase our chances if we reapply for the mortgage which will have to be in a very short time. Reading all your articles, lots of helpful information, thanks for that! Just very desperate to get this mortgage so hanging onto any good advice I can get.
Sara (Debt Camel) says
Who is the lender?
Esther says
The lender is Halifax and I’t a first mortgage for both of us.
Dean says
if the DMP is paid, and there are no other adverse items on the credit file then in February 2022 you will be able to get a high street mortgage off the peg. As long as bank statements don’t show payments to DMP and you are not borrowing from a lender that you defaulted with then they will never know. You will also be able to get a better mortgage rate and allow yourself to save a bigger deposit. Also you may be able to settle the DMP debts for a lot less that the 13k you owe, by offering F&F settlements. So that could be even more deposit money. I know its upsetting and frustrating but thats what i would do. Good luck
Esther says
Thanks Dean!
Sara (Debt Camel) says
I pretty much agree with Dean.
Unless you can get a commitment from Halifax that they will give you the loan if you settlement the DMP, I will be surprised if they change their mind.
Colleen says
Hi
My husband passed in 2017 and we had a joint overdraft with the NatWest for £2,800. I contacted the NatWest who said that I would have to pay it. I asked if I could be put on a repayment plan and they said they would have to send me default notices before a repayment plan could be put in place. In the end I was paying £40 per month. No default, at that time, was registered. Move on to February 2020 and I found a default notice on my account saying I had missed a payment. I contacted NatWest who after a while of investigations said they would put the date back to September 2017. This they have done but it still looks like I defaulted in February because in my payment history it has a D for Default for March April and May. Also my credit file has said I have made regular payments on my accounts for the last three months. This is not right I have not missed one payment on all of my accounts for well over three years. OK having a default is a fact of life but because NatWest did not initially put the default on in Sept 2017 my credit file does not look good. Also the payment history goes from Jan to May 2020 when I have made the agreed payments for nearly three years. I am also now paying the loan off at a reduced rate. Any help would be appreciated. Thank you
Sara (Debt Camel) says
I am also now paying the loan off at a reduced rate
do you mean the overdraft debt?
do you have other problem debts?
Chloe r says
Hi, wonder if anyone can advise –
I switched banks from Yorkshire bank to Santander – I thought the Yorkshire bank account was closed however before deleting the app I noticed that I was overdrawn by £24 due to a fee put on after the switch!
I immediately transferred £24 to the account and without thinking or checking the amount transferred straight back to my Santander account. I however didn’t think anything more of it. At the same time I was moving house and it wasn’t until 7 months later my old housemate presented me with a massive pile of letters from Yorkshire bank saying I still owed £24! I called Yorkshire bank who at first tried to tell me the owed ME £24 and I then questioned this further and they told me that I owed them – I explained the sutuisn and just paid it off. 4 months later I tried to buy a car to find my credit score had gone form very good to very poor and I had a detailed account with Yorkshire bank! I rang the bank and explained all this and logged it as a complaint but they won’t remove the default as it’s not an ‘error’ I’d there anything I can do?? I’m so ready to buy a house and feel this is now all ruined over something I don’t have control of! As far as I was aware I paid the £24 off straight away ! I feel totally out of my depth and anxious.
Sara (Debt Camel) says
so what had happened – did your extra £24 payment not go through?
how long ago was this?
Chloe says
Hi – because my account had switched when I transferred the £24 it bounced back to my current account. I send Yb the bank statement clearly stating I did do this but they still won’t remove it. I didn’t even check and didn’t notice it had bounced back until I discovered all this was going on. I have taken this to the financial ombudsman And hoping they can help me.
Sara (Debt Camel) says
ok, well I hope the Ombudsman does help in that situation as you clearly tried to put it right.
Abdul says
Hi,
I have 4 defaults on my credit report and I have been making payments consistently for just over a year now. I started with 6, 2 now paid off. The default date is noted as 2 June 2014 for all 6 defaults. When do I expect these defaults to come off my credit record?
Thanks
Sara (Debt Camel) says
They should have gone by now :)
Make sure you look at a report which is accurate in realtime. A lot of the credit reports only update once a week or once a month.
You do know you still have to pay even though they aren’t on your credit record?
Aqeela says
Hi,
I have 4 defaults on my account. Two show up as satisfied, but the other two don’t (both with Virgin Media), even though I know I definitely paid them, especially as one is from Feb 2020. I have spoken to Virgin and they have no idea what I’m talking about and can’t even find one of my accounts (it’s from 2016). The recent account default is showing up as paid on their side. What do I do in this situation? Do the defaults need to say “satisfied”? I’m trying to build my credit rating up a bit more as I’m hoping to apply for a mortgage at some point soon
Sara (Debt Camel) says
you cant get this sort of problem resolved on the phone. Send them a written complaint (online form, email or letter) with a screenshot of your credit report (probably can’t do that in an online form but you can say you can send it if they want). Ask for the 2016 debt to be deleted if they have no record of it.
This won’t increase your credit score but it looks much better to lenders especially mortgage lenders. But if the last default was recent you may struggle for a few years to get a mortgage at an OK rate.
Rachael says
Hi there, I was hoping for some advice. I got into some financial difficulties back in 2016 and now have 2 satisfied defaults on my credit file which were registered in feb 2016 ( 1 for £1050 on a credit card and 1 on a credit union loan £350). I have since got a grip of my finance and my credit scores are slowly increasing on all 3 credit agencies and am now in the ‘fair’ category. I’m hoping to apply for a joint mortgage in early 2021 when the defaults will be 5 years old, what are the chances of being accepted? Apologies if you’ve already covered this elsewhere!
Sara (Debt Camel) says
how large a % deposit will you have at that point?
Darren says
I had a very small default (£48) in January 2014 purely due to my own carelessness, it was a telecoms contract that I forgot to cancel and didn’t take any notice until it went into default. Lesson learned! 6 years later this has dropped off my credit report as expected. However the telecoms company sold my debt in 2018 and the debt collector shows up with a default for the date it was sold.
The advice online seems to be to contact the debt collector and ask them to adjust the default date. But I am really worried about potentially resetting the 6 year counter. I don’t remember ever making any contact with them before, but I’m worried there may have been some brief contact that I’ve since forgotten about and this one silly mistake will haunt me for another 6 years.
My credit file is flawless apart from this and I’m hoping to start looking at mortgages in the next year or two.
I have sent an email to Equifax asking for their advice, and figured asking here may be helpful too. All this over £48. I’d just pay it no problem if I thought it would help but I get the impression it may do more harm than good at this stage
Sara (Debt Camel) says
If you are happy to just pay it, then there is no downside of telling the debt collector that they have to change the default date to be what the original creditors used.
It doesn’t matter if you “reset the clock” if you are happy to pay the debt! If the default date is put back, the debt will NOT reappear if you pay it.
Sam says
Hi sara, i have 4 defaults on my account which all defaulted in either december14 or jan15 so nearly 6 years ago, 3 are with hsbc and say default/ended on my credit report but the balance is still saying the amount of the default, i paid them off fully in 2015/2016 through a debt collection agency they sold it too, should the balance say £0 on the hsbc part of the credit report or does this not matter, my other default was with o2 which was also sold and i paid it off fully, on my default for that its listed as the collection agency and a balance of £0
I’m wanting to get a mortgage early next year, and from what i’ve been reading on here i should have a much greater chance after december/jan when those 4 defaults should dissapear, i have no other debt i have credit cards but all on £0 balance and havent missed a payment since those defaults back in 14/15
Sara (Debt Camel) says
You may have defaulted in dec14/jan15 but are those the default dates recorded on your credit record?
Sam says
Yes 3 say december 2014 and one says jan 2015, but shouldnt the balance say zero instead of the few grand that they were, i payed Them off through a debt collection who hsbc sold the debt too i guess, they are not in that agencys name on the report they are still in hsbc and says default/ended and the dec/jac date
So they should come off at the end of the year? I was just worried about them adding a ccj even though ive paid them fully
Sara (Debt Camel) says
Yes the balances should say zero. But the debts are going to drop off in Dec & Jan, so it’s up to you if you want to try to get HSBC to cirect this before then.
I think this is a credit reporting error. They happen surprisingly often!
I don’t think there is any chance that HSBC will go for a CCJ thinking you still owe them the money. If you get any letters / emails about the debts then leap into action and point out they sold it to xxxx who are correrectly now showing you have repaid it.
Sam says
Okay, thank you, i think i will just wait for them to drop off and hope my credit score goes up enough for a mortgage approval, they were 100% paid in full to the agency so hopefully its just an error like you said, thanks again
Nicola says
I have a default account dated 10/1/2015, will this account be removed from my credit report 10/1/2021?
Sara (Debt Camel) says
yes, if that is the default date showing on the account on your credit report.
Has this debt been settled?
Nicola says
No I’ve only just discovered it as I’m hoping to apply for a mortgage within the next year so wondered what my credit report was like. I have a credit card which I pay 20% of the balance each month so it’s more than the minimum payment.
Nick says
Hi
Quick question. I’ve been on an arrangement for about 3 years on a couple of issues. On my credit file, there’s a continuous row of D’s since defaults were registered, other than any kind of arrangement. Should the D’s not be something else? On clearscore it gives the impression that I’m continuosly missing payments. I was under the impression that once a default was applied it would then go to an arrangement to pay. Though I might be wrong.
Cheers
Sara (Debt Camel) says
Once a default is marked, your account will always remain in a default.
The upside of having these defaults added is that the records will drop off your credit record 6 years after the first D. If they had stayed at “payment arrangement” that would have stayed on your credit record for 6 years after the debt has been settled.
VJE says
Around 10 years ago I got myself in a mess financially. I ended up with a lot of credit card debt which I could not afford to pay, after struggling for a few years I defaulted on 4 of these and set up agreements to pay. The majority of these have now come off my credit report however I am still paying off the balances, which should be cleared in around 3 years. I understand that any of the institutions I have defaulted with (and any linked with them) would very unlikely to lend to me ever again (which I understand).
Once all the defaults are off my credit file, will future lenders (other than the ones I have defaulted on) still be able to see a record of the defaults either if I am still paying off the balances or if they are cleared? Is there any benefit to me trying to clear the balances more quickly as I understand a default is just as damaging to your credit file whether it is settled or not, I don’t plan to apply for lending of any sort for at least 4 years when I would want to get car finance.
Thanks
Sara (Debt Camel) says
Once all the defaults are off my credit file, will future lenders (other than the ones I have defaulted on) still be able to see a record of the defaults either if I am still paying off the balances or if they are cleared?
Well they can’t see them from your credit record.
But if a lender asks to see bank statements or to have access to your bank account through Open Banking, then they will be able to see the payments that have been made in the last 3,6 or 12 months.
Is there any benefit to me trying to clear the balances more quickly as I understand a default is just as damaging to your credit file whether it is settled or not
yes and no. It won’t help your credit score.
But you may at the moment be able to get a creditor to accept a full & final settlement offer. With three years to go, they may accept a 50% or 75% offer which would save you money.
Also as these debts are old, read https://debtcamel.co.uk/settlements-old-debts-cca/. For debts that are off your credit record, you may think that is worth a try.
VJE says
Thanks, I did ask one about making a settlement recently and they said no as with the payments I was making it would be paid in full in 3 years. Any links to advice as to the best way to approach this as I may get a bonus at the end of the year which I could use to clear some but it wouldn’t cover the full amount.
Also if we remortgage with current provider of 20 years (not to release equity just for better rate) are the likely to ask for bank statements. We have LTV of 50%. I appreciate they will run a credit search on me so wouldn’t plan to do this until credit report was clear.
Sara (Debt Camel) says
they said no as with the payments I was making it would be paid in full in 3 years.
yes, this is the last point at which it’s likely they would accept a settlement. how much did you offer?
are they likely to ask for bank statements.
That is up to the lender, but they are much less likely to ask than a different mortgage provider. You may even be able to get a remortgage now with them even though your credit record is not clear.
VJE says
I didn’t offer a specific amount, I asked about making a settlement and the advisor went through my earnings and outgoings and said no. They asked about my partners earnings which I refused to disclose as I said it’s not his debt so not relevant, the advisor was quite persistent about this. I got the feeling that because my situation wasn’t great but my partner could potentially help this had an impact on their decision. If/when I get my bonus I’ll approach them again with a specific amount, so is 3 years a rough guide to when they would still accept a settlement? Our mortgage is at a good rate at the moment so we don’t need to remortgage yet. Thanks for your advice. I’ve found your website really clear and informative and would recommend to other people looking for guidance.
Sara (Debt Camel) says
You may have more luck if you phone up to offer a specific amount, but it will, as I said, have to be quite high. The longer you leave it, the less likely an offer is to be accepted but there is no specific cut off point.
Qann says
Hi I’m a little confused. In 2013 I defaulted on a HSBC loan and our overdraft on our HSBC joint account. The HSBC loan is now no longer on my credit scored, as I presume it has dropped off after the 6 years. However the HSBC joint account is still showing. HSBC sold the debt to Cabot Financial about 18 months ago, and there is a small amout left on the debt. However it is still showing up as a default on my credit report. I was just wondering if HSBC sold the debt to Cabot, does that restart the default length, as I’m not sure why it’s still on my file.
Sara (Debt Camel) says
Selling a debt does not reset the default date.
Have you looked what the default date is on the overdraft debt?
Defaults on overdrafts are often later than for other debts. unless you told them you weren’t paying anything to the account any more, how could they tell you had defaulted as there was no minimum payment to not make?
Andy says
Hi, I recently fully repaid a CCJ that I received in March 2015. I understand that this will drop off my credit report in March 2021 following which my credit score should increase (I’ve had no missed payments/defaults since the CCJ was originally incurred).
If I submit the necessary form to the courts to get this CCJ marked as satisfied on my credit report, am I right in thinking that this will still only be visible on my credit report until March 2021 i.e. having it marked as satisfied doesn’t mean the updated CCJ note will then stay on for another 6 years? I’m hoping to get a mortgage next year so really don’t want the CCJ to still be visible after March for obvious reasons.
Sara (Debt Camel) says
Getting it marked as satisfied will not mean it stays on your report for longer.
But is this worth the bother to update the CCJ status? A CCJ still makes credit hard even if it is satisfied. Do you need to take out more credit soon? It’s better not to if you are planning a mortgage next year.
Andy says
Thanks for your reply Sara.
I’m not planning on taking out any new forms of credit any time soon, getting the CCJ marked as satisfied was simply so that my credit report didn’t show it as still unpaid. Are there any downsides to not doing this and just letting the CCJ drop off my credit report as is?
Sara (Debt Camel) says
I don’t think there are any downsides, unless you suddenly urgently need credit I suppose…
Jess says
Hello,
I have been really bad with money over the years and am trying to sort it out. Credit files confuse me though so I’m hoping someone can help me with dummy terms!
I have defaults from 2016 which I am currently paying each month to 3 debt collectors and have not missed any payments since I began my plans a couple of years ago. I noticed on clear score and credit karma that when the DCAs update my accounts, it still says defaulted. Should it not show I’m paying this? It might just be the way I’m interpreting it, but it looks like I’ve defaulted in July, when I certainly haven’t!
Is this normal?
Many thanks
Sara (Debt Camel) says
This is normal. Once a debt is marked as defaulted it always stays in default until it is settled or it drops off, which will be in 6 years from the default date in 2022.
All these “defaults” don’t harm your credit score – it is only the first one that is counted.
John says
Hi, a query. I have just noticed that a default has been applied to my credit file for an old store card which I thought had been paid off ages ago. Turns out there was still £4 remaining on it! I have had no contact from the creditors about this, admittedly I would of moved address in that time, but no emails or phone calls. I now have a default on my account for the sake of £4!! Is there anything I can do to get this removed?? My credit score has suddenly plummeted because of this.
Sara (Debt Camel) says
When did you stop paying it?
Has the debt been sold to a debt collector?
William lockhart says
Hi there, I have 2 defaults on my credit file, both dated September 2014 and both for the exact same amount. Could it be it’s the same default replicated? One is for halifax bank and the other for arrow global, I feel it’s the original debt and the collection agency they sold it on to?
I want to buy my first home, will these dafaults leave my account soon now that 6 years have passed? How much will this improve my credit score, and how long does it usually take to reflect on my score?
Many thanks
William lockhart
Sara (Debt Camel) says
Yes, when a debt is sold, you see it twice on your credit record so that sounds likely.
has this debt been repaid?
William lockhart says
No, I don’t believe I repaid it. Ice only recently started looking at my credit score and when applying for a mortgage, my advisor told me to wait till October to buy because he believed the market would improve, and my credit score would improve also as he said the default will leave my account. Should I make steps to pay it, or shall I let it just fall off my record this month?
Sara (Debt Camel) says
The debts will drop off your credit record this month whatever you do. Your credit score should improve a lot if these were the only problems.
Whether you should pay them is tricky. See https://debtcamel.co.uk/debt-not-on-my-credit-file/.
Andrew says
Hello, I don’t know if you can advise at all.
I recently discovered I had a defaulted payment added onto my credit score report and had no idea what it was regarding. I have since found out after receiving text messages about an outstanding balance it was for Anglian water. It was only for £40, which I have now paid. This was from a previous address where I had been making direct debit payments and for some reason thought they had been fully paid.
I can imagine there will be any way to remove this defaulted payment, but didn’t know if they’re was a way round it due to lack of communication. They did state that they had no forwarding address. After I left the property they were notified of my new address, but because bills were included there was no reason to set up a account at the new property. I then left there a year later and as there was no billing account I obviously didn’t say if moved. However, they have since managed to contact me via text, only recently. If this had been done sooner I would have paid and cleared it. Now it’s affected my score. Is it worth contacting them? Or will I just have to wait?
Sara (Debt Camel) says
I think if you told them your new address then that is a good reason to ask for the default to be removed.
Damien says
Sorry ambushing the thread.
Is there an argument to paying debts off after they have dropped off your report (6 years). If the debts are enforceable and there is very little chance of being statute barred.
Sara (Debt Camel) says
That is a bit vague. Could you say more about what these debts are, what you can afford to pay to them and what credit you may need in the future?
At the moment not many lenders ask to see bank statements. Mortgage lenders mostly. But it may well be that over the next couple of years more credit providers want access to your banking transactions through “open banking” to check on affordability. This will let people see these old debts which you are still paying.
Meg says
Hi there, not sure if I am understanding properly all scenarios above, so please can I ask Re my husbands current case please? Back in 2014 Oct his TSB credit account got defaulted for one or another reason. Card got canceled by the bank of course. A few months or to be more precise, a year after that he has gone to the bank numerous times asking to clear this, ones they told him they can’t see his debt anymore, then next time told him to call customer care(he did and got promised a letter that will offer a payment plan but he never received this letter. The default never appeared on his credit file up until April this year(2020) when he started receiving letters from debt collector that he needs to pay. He set up monthly payments of course. I recently checked his credit record and the default now appears as an Active account with the TSB default date(October 2014) but payments are shown to start April 2020 and are notified sa D(default). So my question is, would this default drop off next month or will stay another 6 years on his file and what he can do to get rid of it as it won’t be fair to have it for another 6 years especisly as he is currently paying therefore he is not defaulting with his current lender(the debt collector). Thanks and apologies for the long post
Sara (Debt Camel) says
his TSB credit account
was this a credit card? or an overdraft on a current account?
I recently checked his credit record
what report are you looking at?
Meg says
Hi Sarah.,thanks for your speedy response. He had current account and credit card too. The default is on his credit card account. He still has his current account but no problem with it. Both Credit Carma and Experian have Arrow Global as an active account that collects the default from Oct 2014.thsy were the ones that started sending letters back Feb/March time and he set up payment amount with them(no calls, just logged in their online platform and set up DD to pay each month).
Thsnks
Sara (Debt Camel) says
If there is a default date in october 2014 it will drop off in October this year.
He will still need to keep paying after that as the debt will not be “statute barred” so he could be taken to court, but at least it won’t harm his credi score.
If the balance is small, it may be simpler to carry on with this. But if it is large and it looks like it will take a long while to clear it, he could read https://debtcamel.co.uk/ask-cca-agreement-for-debt/ and think about asking for the CCA. There is no way to tell if Arrow can produce the CCA without asking.
Lee says
Is there anyway of having a default/CCJ removed early or do they stay on your credit file for 3/6 years?
I have 2 defaults and a CCJ on my file the last default is not going to be removed until 2023.
I have completely paid off one of the defaults and the CCJ and other default have been settled (agreed to a reduced payment).
Sara (Debt Camel) says
Defaults and CCJs both stay on your records for 6 years, paid or not.
See https://debtcamel.co.uk/get-rid-of-a-default/ which looks at situations where you might be able to get a default deleted – these are not common.
To get a CCJ removed you have to apply to the court to have it set aside. You need a good reason to argue that the CCJ should not have been made and there is a fee. Talk to National Debtline on 0808 808 4000 if you think you do have a good reason and they can explain what to do.
Jade says
I’ve recently seen that I have a default of £139 on my credit report for a bank account I had 5 years ago.
I’m in the process of trying to get a mortgage and I feel having this on there is causing a hindrance. I’m happy to pay the amount as it’s only small and something I didn’t know about as it was a staff account I had whilst working for the bank, however if I pay it will it then show on my account for a further 6 years or so I wait a year for it to drop off?
Really confused about what to do.
Thank you
Sara (Debt Camel) says
An unpaid default will be a big hindrance to getting a mortgage.
If there is a default date on your credit report it will drop off 6 years after that, this doesn’t change if you pay it.
A recently paid default will still be hard to get a mortgage, but it means you won’t get hassled by a debt collector and threatened with court.
Have you checked your credit reports from all three credit reference agencies?
Jade says
No at the moment I’ve only checked it with Equifax (ClearScore) should I check with others too?
It’s due to drop off in September 2021 by the looks of things.
The debt is there due to me fleeing a domestic abuse relationship, I opened a new bank account once I had left the county as he had access to the one with the debt on. Letters were then going to the address he was at so o had no idea there was an amount owed, I’ve heard I can add a correction to say this also, could this help me?
Sara (Debt Camel) says
Yes check the others too.
You can add a Notice of Correction, see https://debtcamel.co.uk/notice-correction-credit-record/. I don’t know if this will make any difference to a mortgage lender.
Do you have any evidence about the domestic abuse that you could show to the bank? As it is such a small sum , if you pay it now and ask them as a matter of goodwill to delete the debt because it was the result of domestic abuse and you have some evidence about this, they may be prepared to delete it.
if they don’t, it may be best to wait until it drops off your credit records. Have you reied talking to a mortgage broker?
Jade says
Hi Sara,
I’ve actually had a mortgage in principle accepted this morning, but am still concerned the above could affect me once the full application goes through.
I do have all police records and reference numbers, women’s aid reference numbers and all charity emails that helped me at the time. I think I will contact them and ask if this can be done, If I’d of known about it being on there sooner I would have paid it straight away.
I will contact them to see what they say, thank you for your help
Sara (Debt Camel) says
Good luck!
I would hope a polite email with that much evidence might get a good result.
David G says
Hi
If I start repaying a default from 2015, if I was to offer a repayment plan – can the DCA still add a CCJ? Or would this be avoided if I made arrangement with them?
Also, if I start paying to them will the default still be removed after the 6 years?
Thanks
Sara (Debt Camel) says
Yes a debt collector can still go for a CCJ if there is a payment arrangement but this is MASSIVELY less likely, especially if you supply an income & expenditure form to show it is all you can afford.
The debt will drop off after 6 years from the default date whether you pay it in full, are making payments to it or do nothing.
Once the debt is gone, it can’t reappear but the debt collector can still go for a CCJ if you stop paying.
What was the original debt, when was the account opened originally? What are you finances like at the moment, do you have any other problem debts?
David says
Thanks Sara
It was money barn car finance from 2014 and the default was registered in April 2015. I disputed this as the car had a fault and it was returned but the balance was still outstanding. A couple of years ago they updated the balance as it was shown incorrect, I think this is when they auctioned the car.
The account is now with arrow global and I’ve had an update on my credit report saying the status of your account with money barn will be updated and will show improved on your report and it’s removed.
I was made redundant from my job as airline crew and it’s been difficult and I’ve been trying to trace who is dealing now with this account.
Any advice would be great.
David
Sara (Debt Camel) says
Well it sounds as though it is with Arrow , doesn’t it?
How large is this debt? do you have other problem debts?
Read https://debtcamel.co.uk/redundant-debts/. Unless you got a LOT of redundancy money, your priority has to be surviving and paying priority debts such as rent, council tax, utilities until you can get another job.
David says
Would you suggest i make an arrangement with arrow?
I didn’t get a lot of redundancy due to being in the company 3 years. Not enough for 7000.
I want to get a mortgage next year as well.
If I ask them to hold my account whilst I find work and complete a financial statement to show my income and outgoings currently. Would they still do a CCJ if the account is on hold ?
My father passed away and I’m due to inherit money In 2021 im just waiting for the estate to go through.
All of my defaults are over 3 years old in fact near to 5 years old.
They haven’t got my current address.
Sara (Debt Camel) says
Have you repaid all the other defaults?
For debts that will still be on your credit record, you really need them repaid a year before a mortgage application.
For debts that have dropped off, repaid more than 6 months ago is usually enough as lenders often ask to see bank statements going back 6 years.
Contact details for Arrow here: https://www.arrowglobal.net/en/customers/contact-us.html. If you contact them and say you understand they now have this old debt and you want to make a payment arrangement but as you are currently out of work you can only afford £1 a month, I would be very surprised if they decide to go for a CCJ.
You may want to reasd this: https://debtcamel.co.uk/settlements-old-debts-cca/. I have no idea if it is likely to work with this old Moneybard debt. But if you are planning on settling it in full next year anyway, you could try this first as if they can’t produce the CCA and it has dropped off your creedit record then you don’t need to pay it.
David says
Hi
I’ve been speaking to a mortgage broker who believes he will be able to find me something once things sort of return back to normal and lenders can do 10% but I’d be willing to deposit 15%.
The other 2 defaults haven’t been paid and are on hold.
I’m thinking of doing a partial settlement with them as one is for £315 and £508.
Took your advice and I’ve contacted Arrow Global, I’ve explained my situation and I’ve asked for the CCA. Is it known that if a lender sells a debt they pass over the CCA ?
Thanks
David
Sara (Debt Camel) says
Is it known that if a lender sells a debt they pass over the CCA ?
Sometimes that can happen. sometimes the debt collector can go back to the lender and ask for it.
Sometimes they can’t.
David says
Thanks Sara
I’ve requested it anyway, let’s see what they say!
Would you advise doing a partial settlement on those two accounts? They are due to come off in 2021
David
Sara (Debt Camel) says
See https://debtcamel.co.uk/dmp-partial-settlement/. If they will be off your credit record when you apply for a mortgage there is no downside in partial settlements at all.
David says
Thanks Sara
These two debts are with lowell.
I don’t think they own the debts but might be worth getting more information regarding them.
Mike Mackay says
I have read through the comments and you guys are super helpful, I was hoping to ask a question. A default has just been removed from my credit report as 6 years was up, it’s was my one and only default. There are no ccjs or missed payments on my report, only concern is high credit utilisation more than 60% I owe more than £5000. My question is how long until I see a positive effect from losing my only default? Can it take a time to update? It has been 2 weeks and I have seen no increase.
Thanks in advance,
Mike
Sara (Debt Camel) says
What report are you looking at?
Mike Mackay says
All 3 reports, equifax, experia and transunion. Via credit karma, credit club and clear score.
No increase in score on any after losing 1 and only default, no ccj, no red marks, no missed payments.
Many thanks.
Sara (Debt Camel) says
Your credit record should update immediately. Credit Club & Clear Score are monthly reports, so you may still be see an old snapshot. credit Karma is weekly, so depending on when you ran it, that to may be out of date.
I suggest you check again in a month. If the scores haven’t changed then, get the Statutory Credit Reports for each of the CRAs (links here https://debtcamel.co.uk/best-way-to-check-credit-score/) and have a good look through those.
Simon says
So i have 8 defaults on various credit cards and loans that i still owe on. I owed capital one 2k but 3 months ago offered the. 1k to settle the debt which they accpected. Since then on clearscore i have beencpre-appoved for a credit from capital one as well as ocean finance and the post office (who are owend by capital one)
Should i apply? I have been told that they do offer second chances to people (capital one) but is it too soon? Or the fact that i still owe other credits cards to apply?
I just dont want to apply if they are mote than lilely to say no as it will lwave a hard search on my account.
Sara (Debt Camel) says
Do you want this for more credit? or to try to repair your credit score?
simon says
bit of both really, the remaining credit cards i should have paid off in maybe 12 -18 months (more than likely through a partial payments as i am in a DMP for them all )
however i am not looking to go back into more debt but could do with it to build my credit so even a limit of £100 a month would be helpful as that is manageable.
as I say capital one said “its a second chance offer but they could not guarantee I would be accepted once a credit check (HARD SEARCH) is done” I would just like some advise as since they have said i am pre-approved would it be worth applying considering I have only just made a partial payment to them a couple of months ago? a hard search would surely hurt my file (I haven’t applied for credit in well over a year and only have one search on my history)
also if I do apply would you recommend maybe going with the ocean finance or post office over going directly with capital one even though capital one own them all ?
Sara (Debt Camel) says
I can’t be sure whether you would get this “pre-approved” card. It would seem a bit odd if you did as you have so recently settled with them?
What I would say is:
– with 8 defaults on your credit record, there is going to be little or no improvement through having a new credit builder card until the majority of the defaults have dropped off. Especially one with such a tiny limit – cards with a limit of under £250 are of little help to you.
– these are a trap. They are not being kind and offering you a “second chance”, they have you marked down as a likely cash cow that will pay them stacks of interest.
I suggest you settle these debts and don’t borrow anything for a couple of years. Then think again. LOQBOX is a better way to rebuild a credit score – massively less risky. See https://www.loqbox.com/en_gb/. But that requires you to be able to save a set amount each month. If you can turn yourself into a saver not a creditholic this will make a huge difference to the rest of your life!
Simon says
Hi Sarah
Most of the defaults won’t drop off until 2025 so its going to be a while.
Thanks for the advise though. You do a great job on here and having read most of the comments and articles i know you have helped myself and many others with their finances and life, keep up the good work.
Sara (Debt Camel) says
then that credit builder card will do you no practical good and could be a disaster. They are best delayed until about 6-12 months before you expect your credit record to be pretty clean so when the defaults go, you already have one form of credit sitting there having been repaid for 6-12 months.
Simon says
Hi I have a default on my account from August 2015 the account was the. passed onto a DMP. I did a settlement in August 2018 so I don’t owe any money now to DMP. I’ve had no missed payments or any default on credit cards etc since August 2015. The credit card I have now has a high limit and Ive only used 30% of my limit. But my credit rating is still low, why would this be? Would it be worth having my credit score looked into? I’m trying to get a mortgage but it’s not looking good. Thank you
Sara (Debt Camel) says
Well the default will still be affecting you. And any other debts in the DMP which had a payment arrangement marker.
And your current credit card – it would be better if you can get get the utilisation down below say 20%.
But your calculated credit score is not that important for a mortgage application. How large % a deposit do you have?
Simon says
Thank you for you’re response. Ive been gifted a house with no mortgage, but need need to take out a £100,000 mortgage to extend the house. The house is worth £300,000. My income is approx £40,000 annual. I just don’t want the default from 5 1/2 years ago to stop me getting the mortgage.
Sara (Debt Camel) says
then I suggest you to to a mortgage broker now. If they don’t get you a good offer, then sit back for 6 months or so until the default drops off your credit record and then have another go.
This is so close to dropping off your credit record you should NOT accept a mortgage unless it is at a good interest rate.
Simon says
I shall do that, thank you
Smon says
Hi, My partner and I were trying to apply for a joint mortgage and he didn’t realise he had a settled default from 2015 which now seems to be an issue. The background is that when he split up up with his then partner they both moved house. She continued to order goods online under his name, got them delivered to her parents and never paid. My partner only found out when a debt collection agency phone him and he settled the debt on the phone there and then (so in 2015) rather then pursuing his ex and getting the debt into her name (he now obviously regrets this). In the meantime he was able to get car finance and a personal loan and therefore didn’t think anything was amiss. In fact he had to check his credit file to even see what the issues now is with the mortgage provider. He thought it would maybe show up as late payment, but not default. This is the only issue on his credit file.
I have a few questions:
– Mortgage provider sent application to the underwriters. Could they approve the mortgage still with it being 5 years and the debt being settled 5 years ago as well?
– If not and I would pursue to get the mortgage just under my name – would this application count as being rejected (application hasn’t been made it just came up when we were ready to apply)
Sara (Debt Camel) says
oh dear. It is a shame you didn’t check both your credit records before applying for a mortgage.
It is highly unlikely he could have got the debt shifted into his partner’s name in 2015 – he didn’t make a mistake in settling the debt.
Could they approve the mortgage still with it being 5 years and the debt being settled 5 years ago as well?
yes, this could well happen. But there is a possibility it won’t.
I would pursue to get the mortgage just under my name
Would you pass the affordability test on your income alone?
If the current application is declined, your better option is to talk to a good mortgage broker (eg London & Country or Habito) about this decline and what other lenders are more likely to accept the application.
Smon says
Thanks for your response.
I would pass the affordability checks myself. I am just worried about this leaving a mark against me as a rejected mortgage application?
Sara (Debt Camel) says
If you would pass the affordabilty on your own, then the current mortgage application must be very solid apart from this default.
I would suggest waiting and seeing what will happen. But there are no guarantees.
Henry says
Hello,
I currently have 2 defaulted account, one defaulted in Nov 2015 and is due to be wiped off in Nov 2021 and another in 2018. Both I have re-payed in full and I’m looking to be buying a house with my partner in January 2022.
My partner has excellent credit and currently mine is poor and nearly touching fair, it has been improving significantly overtime and I’ve been managing my finances strictly over the past 2/3 years. We will be looking to put down a 10% to 20% deposit down on a house worth roughly £160,000.
Do you think it would be sensible for me to apply for a joint mortgage with 1 outstanding default but a large deposit? How do they calculate lending to couples if one person has bad credit but the other has excellent? Is the best option for my partner to apply on her own with an affordability assessment?
Can you also get people added to a mortgage at a later time if my credit improves significantly ?
Sara (Debt Camel) says
How do they calculate lending to couples if one person has bad credit but the other has excellent?
Your actual credit scores mean nothing for a mortgage, it is the problems your two credit reports show that makes a difference. So you will have one default, 3 years old and settled more than a year before – that should probably be OK, but who knows what the mortgage market will be like in a year? When you apply, go to a good broker (London & Country or Habit), do not apply directly to a lender.
Is the best option for my partner to apply on her own with an affordability assessment?
She would have to show that she can afford the mortgage repayments on her own income, not taking any account of yours. For most people that is impractical.
Can you also get people added to a mortgage at a later time if my credit improves significantly ?
A transfer of equity is possible. If the house is expensive, there may be stamp duty involved, it may be a good idea to take tax advice especially if you are not married.
It would be a new mortgage, best switched to when a mortgage fix is ending.
SKhan says
Hi Sara,
I have 2 defaults of British Gas on my credit report opened March 2015 on my credit file. However their is and update date of November 2016. My question is will the 6 years count from the date opened or the date updated?
Also, since it’s been so long would they still go ahead and put a ccj on for it since its been longer than 5 years and few months.
Do you advise paying them off or waiting for it pass 6 years?
Sara (Debt Camel) says
That sounds confusing, I suggest you talk to National Debtline on 0808 808 4000.
Harris says
Hi. Please help.
I have taken a 25k loan. I have held the pavement for 6 months as a payment holiday. I now have to pay. I will miss 3 payments and then the account will Go to arrears and the loan will be defaulted and given to Morecraft. I can work out a payment plan. I want to know. Can the bank just issue a CCJ Instead. Can they go for my house or wages through work. This was a unsecured loan.
Sara (Debt Camel) says
Is this a very recent loan?
Are able to to make any payments? What is the rest of your financial position like?
Hayleigh says
Hi, I was looking for some advice. I’m trying to get a mortgage (first time buyer) but I have a default on my account for an old vodaphone contact. I disputed this at the time as I ended the contract but the contacted renewed (although I wasn’t using it and they agreed it ended!, however I’m no further forward I called them last week to ask them to listen to recorded calls etc but they said they couldn’t. Am i best to pay the £990 and get the default to satisfied to help me get a mortgage? So stuck on what to do?!
Sara (Debt Camel) says
The problem is, you are unlikely to get a mortgage with a default on your credit record that has only just been paid. Most lenders like to see problem debts settled at least a year before a mortgage application.
How long ago is the default date?
Hayleigh says
The date of default on it is 02 May 2017
Sara (Debt Camel) says
so that won’t drop off your credit record until 2023 :(
Your options are to pay the bill now and probably still have problems getting a mortgage for at least a year.
Or to see if you can dispute the debt and get the default removed. If you want to try this, I suggest you talk to the Consumer Helpline, see https://www.citizensadvice.org.uk/consumer/get-more-help/if-you-need-more-help-about-a-consumer-issue/ as this is a consumer issue.
Mr SI says
i havea default listed from June 2017 from when i was made redundant, the debt was bought by Robinson Way/Hoist Finance. Ive been paying them an agreed amount for the last 12 months. I currently owe them 10k.
I want to offer them a settlement figure to try and remove the debt, obviously the default will remin til 2023 on my credit file. Ive read many different percentages to offer as a starting point from 15% to 30%.
if i continue to pay them at the current rate they’ll be waiting another 29 years to get the full amount back.
Any thoughts please.
Nick says
FWIW I had half a dozen large defaults in 2014 and a couple of years later made F&F settlement offers of 30%. Arrow Global and Amex quickly agreed, others took longer and I agreed a slightly larger percentage. Hoist/Robinson Way was the worst and most obnoxious firm I dealt with. After 4 years of haggling and several upheld formal complaints we finally agreed on 50%. While I know that it is legal I think it is shameful that debt collectors can buy a loan for a penny and go after you for a pound. It must make for whacking great profits.
Weatherman says
Hi Mr SI
The best thing to do is to work out how much you can afford to pay. If you write to the creditor with details of your income and expenditure, and details of where the money you’re proposing to pay with has come from, they’re more likely to agree to it because they can see that it’s the best they’re going to get.
Like you say, it’ll take them a very long time to get repaid if you keep paying at the current rate – so they might well be happy to take a lump sum!
If they don’t agree to it, this article has useful information: https://debtcamel.co.uk/full-final-settlement-rejected/
Sara (Debt Camel) says
There is one other thing you can try – the problem is it’s not guaranteed to work and this debt is pretty recent, so that makes it a bit less likely…
But you could ask the debt collector to produce the CCA agreement for the debt (I am assuming it is a loan or a credit card – this won’t work for an overdraft). If they can’t, the debt is unenforceable in cort and you can simply stop paying. See https://debtcamel.co.uk/ask-cca-agreement-for-debt/.
Sherley says
Hi Sara
I had a default Feb 2016 which has been settled in December 2018. I am keen to apply for a hsbc loan for £19k. What are the chances of being accepted?
Sara (Debt Camel) says
That is a huge loan, is it at a good interest rate? What is it for? Is it secured?
Do you have any other problems on yiur credit record eg late payments? Any payday loans?
Sherley says
Interest rate is at 16.9%. I have a pcp car deal which i will cancel as I’ve paid over 50%. Had a parking ticket CCJ which was cleared also in 2018. Small loan for £3k to clear a credit card. Loan is to consolidate the small loan, buy car out right and insurance for the car.
Sara (Debt Camel) says
ouch, it’s the CCJ that is more likely to be the problem than an old default.
Keeping consolidating really increases the cost of credit – credit card to small loan to a large long term loan. Could you not carry on paying the small loan? And go for a second hand car from a reliable make for less than 10K
Sara (Debt Camel) says
and when does the PCP end? could you not carry on with it and then get a loan for the balloon payment at the end?
Sherley says
Theres a method to the madness. I have done the sums behind this and it works out well as i am trying to save for a house. I believe HSBC only use experian, to which is not recrded on my credit file. Is the chances of such a loan possible?
Sara (Debt Camel) says
Do you mean HSBC only check Experian for loan applications? That sounds unlikely for large loans.
Or that they only report to Experian? I doubt that.
A very large loan on your credit record will make it harder to get a mortgage… Much better to pay off the small loan and let the PCP end then take a smaller loan for the balloon payment, even if this costs you a bit more this year.
Or if you already have savings, just clear that small loan! Then you can replenish your savings with what you have been paying to the loan each month.
Frank smith says
Hi, I have 10 debts originating from; 2 overdrafts, 2 credit cards, 2 loans, car finance, 3 store credit agreements. I went through a really bad patch in my life in 2017, and had no income. I ended up with defaults on all these except the car finance and overdrafts registered in 2018. Since 2018 I have been on a step change DMP. I have repaid at the levels set since.
I am in a position now where I can repay all these debts by borrowing money from a family member, the total sum is around £14k. But I would have to pay my family member back. These debts are all interest frozen, so is it worth me settling them or should I just continue with the token payments?
I am in a good job and would really want to get a mortgage soon so would be great to know fastest way to improve my credit to get there.
Thanks
Weatherman says
Hi Frank
If you are happy that the repayments to your family member will be affordable, then accepting their loan would be the quickest way to repair your credit record.
Whether you continue with the DMP or pay the debts off with the loan, the defaults will fall off after 6 years. But the token DMP payments are lower than the contractual payments – and these reduced payments will *also* show on your credit report for six years. So the earlier the final reduced payment is, the sooner your credit report will improve.
You might still find it difficult to get a mortgage for a few years while the defaults remain on your credit report, but the post-default damage done by the lower DMP payments will be repaired quicker if you take the loan and pay them off.
The mortgage lender might also ask you about *any* debts that you owe when you apply – you should still tell them about any remaining debt to your friend, because hiding it from them might count as fraud (they would also see any regular payments coming out of your account).
Sara (Debt Camel) says
So the earlier the final reduced payment is, the sooner your credit report will improve.
Strangely your credit score will not improve when you settle a debt. But it will make other lenders much more prepared to offer you credit – they don’t actually use the credit score that is calculated for you, they have their own.
But I am not sure how you have any hope of getting a mortgage if you can only afford low payments to your DMP at the moment? How will you hope to save a deposit? If this is unrealistic, I suggest you forget about it for a while and concentrate on clearing your debts.
And Weatherman has pointed out the problem of applying for a mortgage when you have a large loan from a family member.
In my opinion it would be foolish to borrow that much from family to clear debts where the interest is frozen. You could perhaps offer your creditors 30% of the value of the debt as a full and final offer, saying that the offer of money comes from a relative if it will help you settle the debt. See https://debtcamel.co.uk/debt-options/less-common/full-final/ for more about these offers.
Jack Jarvis says
So, If you’re credit is so poor, and even though you have spent all you’re time and effort to make yourself debt free, which with many taking years to pay off. Is it not very unfair that it would still massively hinder you for a further 6 years to get a mortgage, or even get a car on finance at that. Isn’t this a bit excessive in terms of trying to better yourself for the future. Many folk have defaults on their account by accident or a lapse in concentration due to busy life schedules, so I’d say within that 6 years it’s very demanding to try keep tabs on it all for so long knowing its going to hinder your score.
So, conclusion is you’re debt free and still feeling crap because your continuously stressing out about trying to get a mortgage you may never get because the “computer says no”…all because your were a day late on a payment last pancake Tuesday.
Sara (Debt Camel) says
Well I agree! See this article I wrote when the regulator stated looking into the market 2 years ago… the investigation got put on ice last year because of Covid-19 but I hope it is soon going to restart.
Liana says
Hi,
My graduate account with Santander defaulted on the 23rd of January with a balance of £999.76. (I believe it was defualted in error so I have an ongoing compliant.)
I managed to pay off the defaulted account on 11th February. Just in case the default doesn’t get removed, which I think it should be as I was told misinformation by Santander themselves how bad will a quickly paid default look on my credit report?
Weatherman says
Hi Liana
In terms of your credit score, a quickly paid default looks the same as an unpaid default. But lenders look at the information beneath the score – so they might look more kindly on a quickly paid default, although there’s no guarantee of that (e.g. they might just have a policy of treating any default as bad, repaid or not).
While your complaint is ongoing, you can also add a Notice of Correction to each of your credit reports, to explain that you are disputing this default. Again, no guarantees – but lenders will be able to see it.
John says
Hello,
So I have been dealing with drafty loans and fell back on loans in 2018 and since then had one or two payment arrangements but have not kept up with them.
I have been asking them to apply and backdate a default but they keep saying you are on an arrangement plan but I have been paying £5 per month for over 16 months and my previous arrangement plan was £15pm
They said they cannot and I have asked the fos to help me.
In 2018, I set up a payment plan because they emailed me and messaged me constantly and was scared. But in only paid for 6 months maybe.
They are so rude and have even told them on multiple occasions of the anxiety they cause while coming to an agreement.
So they finnaly said NO to backdating or applying defaults and they have sent back up to fos for reasons. I have clearly not paid to any arrangement plan and has been with fos over 8 months now.
Even my credit record shows I’m on a payment plan but I am not. How can I resolve this?
Sara (Debt Camel) says
have you looked at making an affordability complaint to them? See https://debtcamel.co.uk/payday-loan-refunds/. If you win this they have to remove the interest and remove all negative marks from your credit record.
John says
I had affordability claims accepted all but this one because I only applied to it once and its a credit line. The fos rejected it even though I had 4 other payday loans at the time in 2018.
In 2018 they bombarded me with threats and I set up a payment plan for 6 – 10 months for £15 but since then have only paid them £4. I asked them to apply and backdate a default and they have rejected to so the fos is sitting on it for months.
Also in 2020 they passed by debt to CRS but it was not sold to them as on my credit report still shows as drafty.
Should I fight this battle, I have told them the stress causing me but they don’t give a toss. I have from this month stopped by standing order of £4 per month until they apply a default.
I may have paid a payment plan up to latest 2019 but they will not apply and backdate any default.
Sara (Debt Camel) says
ok, well you need to hope FOS makes a good decision here.
do you have a lot of other debt problems still?
John says
Yes all others have defaulted and on a DMP.
I just don’t want to be on a so called arrangement plan with them when I don’t know how much it is for I have been paying random amounts.
I have stopped my payments to them now and asked them to show me an arrangement plan with payments matching this so called plan.
The reason I am doing this is I don’t want this to be on my record for life like a prisoner.
Sara (Debt Camel) says
how large are the debts in your DMP? how much are you paying to the DMP every month?
John says
Sorry couldn’t reply to your message
Paying £100per month for £18k debts
Sara (Debt Camel) says
Have you looked at your insolvency options? Being trapped in a never-ending DMP can be a disaster. Honestly your credit record is not the most important thing here.
Are you buying or renting?