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
Kerri says
Hi I currently have a very poor credit score, I have 4 defaults, most recent being from March 2019. I have recently just paid off in full all of the defaults and I am looking to get a mortgage, I am not eligible for any credit cards or loans to try and improve my credit because of my score so I am struggling to build it up. Any tips? And do you think I will be able to get a mortgage any time soon?
Weatherman says
Hi Kerri
Unfortunately even if a default has been repaid it’ll show up and might alarm lenders. Some lenders might be a bit more forgiving if you’ve repaid the default, but there’s not a guarantee.
It can take a bit of time to improve your credit score if it’s as low as it sounds. Try taking the steps on this page: https://debtcamel.co.uk/credit-score-change/
Don’t forget that a lender doesn’t look at the score itself, but at the information underneath it. So if you have a deposit and a salary that could qualify you for a mortgage, try speaking to a broker that specialises in ‘bad credit mortgages’ – but bear in mind that the rates you pay will be higher.
After about 3 years the impact of the defaults decreases, and after 6 years they fall off altogether – so your option is to wait it out.
Good luck!
Sara (Debt Camel) says
The “rule of thumb” used to be (pre pandemic) that if your defaults are all older than three years AND they have been repaid for more than a year, then you could get a mortgage from some high street lenders at an OK rate. Not their “best” rate, but a decent one, not a bad credit mortgage.
It’s hard to predict the mortgage market for the rest of this year. But hopefully it will go back to that old “normal”.
I think in your case that will be well worth waiting for until, it sounds like, April 2022.
I don’t recomment a bad credit mortgage sooner. A bad credit broker will assure you you will be able to mortgage down to a good rate after a couple of years. But it is you stuck with the expensive mortgage if that isn’t possible. I have seen this happen to too many people :(
Lauren Garghan says
Hi Kerri, very similar situation to me. 4 adverse defaults on my file, 1 just over 2 years old and 3 at over 3 years old. All satisfied as of November 2020, some earlier. My partner and I are currently in the process of hopefully getting a mortgage with Aldermore, with the government help to buy. It’s a fixed rate for 2 years, a higher interest rate yes but we’re hoping that after the two years we will be able to get much better rates.
My question is – all my defaults are satisfied in full. I have a credit card that is paid off with the full balance available. Would making a small purchase on this card and paying it off in full every month help boost my score? Or is it a pointless exercise due to the defaults?
Many thanks Debt Camel!
Sara (Debt Camel) says
This credit card, were there any problems with it in the past or does it have a clean history?
Lauren Garghan says
Hi Sara,
Clean history, no late payments.
Thanks
Lauren
Sara (Debt Camel) says
Then using it every month and repaying in full automatically by direct debit will help your credit score a bit. After the defaults have dropped off, having this excellent debt record remain I’ll help get your score up to very good.
Lauren Garghan says
Brilliant thank you. I’ll make a small purchase every month and pay it off in full then, many thanks for the advice!
Simon says
Hello,
So i am in the same boat. I have 6 credit cards that i defaulted on in Jan 2019.
I have partial paid off 2 off them (capital one and luma)
I still owe 16k on the other 4 (barclays, mbna, vanquist, bank of scotland) i was hoping to get these partial paid by the end of this year (11k paid back roughly)
If i have these all partially paid by December 2021 and then save say 20k by Decemeber 2023 what chances do you think i will have in getting a mortage?
Sara (Debt Camel) says
I honestly don’t think there is any point in me guessing what the mortgage market will be like in 2023.
You know what you have to do – Pay off the defaulted debts (and also any with missed payments that haven’t had a default date added) as soon as possible and then save as large a deposit as possible.
Also your credit record needs to be squeaky clean from now on – make sure if you move house all your old utilities are paid on the final bill before you cancel any direct debit. And same if you change your mobile provider. You do not want to sort out all your old problems then find a new default has slipped past you.
simon says
Hi Sara
thank you for the great advise. could i ask. on my Vanquist account they never put on a default. I owe them 3.6k, if i offered them a settlement fee of say 3k and they accepted it would they then put a default on it? they said once the card is paid off it will closed anyway i just wasn’t sure if they would then apply a default which would effect me for another 6 years. if they do i’ll just pay them in full.
sorry another quick question.
My friend is in an IVA and owes just over 20k, he has 3 years to go on it and has been told by the IVA people that if he pays 11k then everything will be closed off. (he has an inheritance coming for 15k) so was thinking abut doing that but i didn’t think he could as it was an IVA, i thought he would have to break from the IVA and go back to his creditor to make them an offer like i am doing.
does that sound right?
Sara (Debt Camel) says
when did you get missed payments or a payment arrangement being recorded on your Vanquis account?
your friend – suggest he reads https://debtcamel.co.uk/iva-settlement/ and that he should ask a question on that page .
michael says
Please use caution in this particular situation.
A person who receives a inheritance into an account must declare this windfall and the entire sum is due into the IVA!! The only way an early settlement can be achieved is to have it gifted by a third party. If the inheritance is a living inheritance, the giver should make an offer to settle the IVA on a persons behalf. Have that offer accepted by creditors and complete the transaction closing down the IVA. BEFORE an further payment such as the balance of the inheritance is paid.
simon says
Hi Sara
my last missed payment registered on July 2020 i have not missed a payment through them, It’s just if i can pay them a partial payment to settle the account (since they are going to closet it anyway) i would rather do that but not if they are going to then put a default on after its closed as the 6 year clock will start again whilst i am already 2 years into that 6 year clock now.
thats why i am doing partial payments with the other as they have already put defaults on the them so my credit is already bad because of that so makes no sense to pay them in full.
thank you for the great advise you give me and others everyday, you make a difference to people’s lives and i hope you know that so thank you very much.
Sara (Debt Camel) says
“my last missed payment registered on July 2020 i have not missed a payment through them”
are you saying you have never missed a payment to Vanquis? why are they going to close it?
The 6 year clock for dropping off starts with a default or a setlement. If you just have missed payments or a payment arrengement, the debt will not drop off your credit record until 6 years after it is settled.
Simon says
Hi Sara
So i am in a DMP plan with pay plan who have been very helpful the past 2 years. All the interest is frozon on the accounts and i pay them £206 a month. I am saving and when i get to a certain amount i ring one of them up and offer them an amount to close the account.
When i first went into the DMP back in Decemeber 2018 thats when the missed payments started and the defaults kicked in around september 2019 and all the accounts.
When i log into total money all of my credit cards accounts say defaulted since Sept19. When i drill into them every month says default on them all the way up until Feb 2021 – so i am assuming they would drop of around october 2025 would that be right?
Wirh vanquist for some reason they never applied a default they just classed it as a missed payment. They accepted the offer from pay plan and froze interest but thet sent a letter saying omce the account is paid in full it will then close. So i was thinking shall i do a part payment for them as well to get it paid quicker or will that mean i would need to wait another 6 years from then for it to start improving my score
Sara (Debt Camel) says
It would have been better if Vanquis had added a default date back in September 2019. Those defaults will disappear completely by Oct 2015 as you say.
With the Vanquis one, if you settle it now, it will stay on your credit record showing the old missed payments until Mar 2027.
So from now to Oct 2025 you will have lots of defaults and one account showing settled with missed payments. Not really much improvement from them all showing defaults.
Then from Oct 2025 to Mar 2027 the defaults will have gone but the old Vanquis problem will still show.
So Vanquis haven’t done you a favour here, they have harmed your credit record for longer.
One thing you could do is offer them a partial settlement on the condition they add a default back in Summer 2019.
Simon says
Hi Sara
So all my other credit cards that have defaulted back in Sept 2019 will fall off Sept 2025 right?
But if i end up paying vanquist in full and they close the account they won’t put a default on?
It will just show as the last missed payment being July 2020 as they are classing everything as a normal payment now.
Sara (Debt Camel) says
all my other credit cards that have defaulted back in Sept 2019 will fall off Sept 2025 right?
yes.
But if i end up paying vanquis in full and they close the account they won’t put a default on?
that is less certain. The problem is it looks as though they should either have defaulted you or carried on with missed payments or a payments arrangement. As they are marking you as making normal repayments, that is wrong if they have frozen interest.
So the problem is, when you settle the account, in full or in part, they may well notice this and correct it. But they may not. When a lender has made an error it’s hard to know what the best option for you is.
But as I say, it would be better if they had defaulted you before as at least then your credit record will be clean from Oct 2025.
[some of the dates in my previous reply were confused. I have corrected them.]
Simon says
Hi Sara
I thought that about the dates. Yeah i think it would have been eaiser if they did default me like the rest.
Sorry i didn’t mention. I have been in the DMP since Dec18 and as i say vanquist just had it down as a couple missed payments until it was fully uo and running then they classed it as just a normal payment. Reason why there was a missed payment in june20 & july20 was because i couldn’t afford my DMP them months so made a token £1 payment but as i say its back to normal payments. Even on clear score it says ACTIVE under the account whilst the others have default and been sold to the PRG or Moorcroft.
I think i’m best part paying them ones and paying vanquist off in full, just incase they try to put another default of somesort on
Nick says
I think that most or all lenders are currently very risk averse. I had some defaults 6 years ago, all long since repaid, and which will drop off my file in the next month or two. I checked with a broker a month ago to look into mortgage possibilities and the response was “no way”. Apart from the defaults I have had blemish free credit card and bank accounts for 6 years, all cards paid off in full every month, have a high income and have significant savings, yet my most recent credit report assessed me as “very bad”. A year ago it was “good” and nothing has changed since then in my personal circumstances. I think that lenders are currently scared of a wave of defaults, repossessions and falling residential property prices.
Rovilsan says
Hi,
I had a default which ended mid 2020. Creditor contacted me before the default end date and threatened me that they will take me to court if I don’t pay it back. So I told them I will make monthly payment as I cannot afford to make large payment.
It’s now been almost a year and still on monthly payment and default has been lifted.
My question is will it affect in any way if I stop paying them the amount I’ve arranged? Will they take me to court?
Any advice will be appreciated.
Thank you
Sara (Debt Camel) says
See the Debts defaulted over 6 years ago but where you have made payments within 6 years section https://debtcamel.co.uk/debt-not-on-my-credit-file/which looks at this exact situation.
Depending on what sort of debt it was, asking for the CCA agreement can sometimes help, see https://debtcamel.co.uk/ask-cca-agreement-for-debt/.
Jay says
Hi, my credit rating took a beating back in 2018 due to some personal issues. I’ve cleared 3 credit cards which I’d been making minimum payments on and literally am up to date with anything I owe. I defaulted on an aqua credit card which went into default in 2019, it was issued with a £900 credit limit. I challenged them on the affordability and checks but they rejected. I was made redundant in September of last year and I’m trying to repair the damage that’s been done. Would it be of benefit now to start making minimum payments to reduce the balance as I’m planning on looking for a mortgage in the next 2/3 years. Obviously the default won’t drop off until 2025 but I just want to do the right thing but it’s a minefield trying to work out whether to be patient or try and reduce the balance. Any help and advice is greatly appreciated.
Weatherman says
Hi Jay,
If you’re able to, reducing the balance is a good idea. If you can clear the debt by the time you apply for a mortgage, then although the default will still show, it will be marked as ‘satisfied’. Making payments is also a good way to stop Aqua taking further action like a CCJ that could further damage your credit report (although it’s not a guarantee that they won’t).
You can also ask Aqua to freeze interest and charges on the account for a period, particularly if you’re unemployed. They might not agree, but if they do, that means any payment you make goes toward paying off the amount you owe.
It might also be a good idea to speak to a debt adviser about your situation to make sure you’re aware of all your options & the implications for you & your credit report. National Debtline are free to call: 0808 808 4000
Sara (Debt Camel) says
As a rule of thumb, you want all defaulted debts to have been settled a year before a mortgage application.
T says
Hi, thanks for the informative article. I have one default on my credit file which I’ve been paying off on a monthly basis since August 2020.
At the start of 2021 I opened accounts with a couple of credit builders including loqbox (unsecured loan) and Bits (store card) and thinking of adding a third with Portify (loan). Will my score increase with these subscriptions? Or will I have to wait a few years before the default gets older, the default occurred in May 2020. Appreciate some feedback, thanks
Sara (Debt Camel) says
I think your score is only going to improve slowly. LOQBOX will help a bit, but the main problem is the default is so recent.
I suggest not getting Portify and using the money you would have spent on that to pay of the default quicker. Clearing the default won’t improve your credit score but it can make a big difference to your chance of getting credit in the future.
T says
Thanks, appreciate the suggestion.
Daniel says
I am in the process of house hunting and mortgage applications but when I completed my credit check I only recently found out that I had a Default Account against my name from May 2020.
I have paid the outstanding amount in full and received receipt of such payment from Lowell Properties.
They have informed me that:
“Every month we send details of the payments we receive to the credit reference agencies. As there is no outstanding balance
due on this account, we will inform the credit reference agencies that your account has been settled.”
I am in contact with Experian also in regards the the Default and they have informed me that:
“They’ve (Lowell) confirmed the default is accurate, so we don’t have permission to amend or delete this entry on your credit report”
“The account defaulted prior to Lowell purchasing it”
I would appreciate any independent advise as to how this will still affect my credit score and also if it will affect my obtaining a mortgage.
Subsequently my wife has what is deemed a perfect credit score (999) on Experian. Would this work in our favour?
Many Thanks
Sara (Debt Camel) says
What was the default for, who was the lender? Do you agree it was reasonable?
A recently settled default is going to make it MASSIVELY harder to get a mortgage. Your wife’s credit score doesn’t make a difference, lenders tend to look for reasons to refuse.
Daniel says
The default was for an internet dongle from Three Network. It was then passed to Lowell. I agree it was reasonable.
I appreciate the capital letters to emphasize how hard it is going to make things…
Is it worth contacting either Lowell or Experian with a goodwill adjustment letter to let them know it was an honest mistake and not in my character.
Many Thanks
Sara (Debt Camel) says
Certainly not worth contacting Experian – they just report what the creditor tells them too. I would be very surprise if Lowell will agree to delete as a goodwill gesture.
You can add a Notice of Correction to your credit record to explain you were not told about the balance owing and yuou paid it as soonas you found out (if that is correct?). See https://debtcamel.co.uk/notice-correction-credit-record/. Many mortgage lender may not be that interested in the excuse though.
You need to talk to a mortgage broker about your options. If you just apply to a lender direct you are likely to be refused. A very large deposit can help…
John says
Any advice on how to resolve this?…
In short, I was lied over the phone that stopping the contract will cost £50, which I couldn’t find anywhere in the contract, so after I paid all installments, I removed direct debit from my account.
BT BRITISH TELECOM ( Never take contract with them! ) have opened a default against my account for £34, which is completely diffrent than what I was told over the phone.
Opened:
29 Jul 2016
Defaulted date:
25 Oct 2019
So since then, I haven’t heard anything from them, they knew that I was changing address and they still had all my contact details, but they never contacted me with a default notice, the other problem I have is that the account defaulted 3 YEARS after it was opened, which is ridicilous, as that means, the default is only 1.5 years old instead of 4.5y.
Weatherman says
Hi John
No organisation needs to contact you before adding a default on your credit report (confusing, the ‘default notice’ isn’t about credit report defaults but about court action – and only applies to financial services anyway).
You should complain to BT, and try two arguments:
1) They should never have added this default, because you never owed the money
2) If you did owe this money, they should have added the default 3-6 months after you missed the payment, as per the ICO guidance
If they refuse, go to the Ombudsman that covers them (there are two – BT can tell you which one they use).
John says
Hi Weatherman,
Thank you for your reply!
I went along and made a payment, because I wanted to get it “Settled” as fast as possible, because I needed to have a clear account for the job. Do you think I still can go and complain and do something about it, to achieve either:
A. Have it completely removed
B. Have the time changed, such as, the defaulted started from 2017, instead of 2019
Sara (Debt Camel) says
A) is much more difficult as you have paid it.
B) if you didn’t make any payments from say March 17 then you can Argue that the default should be no later than 6 months later in September 17.
Sunday says
Hi,
I have a default registered in March 2019 and have accepted an offer from the collection (Hoist Finance) which will only settle the amount by September.
As I am interested in making a mortgage application later this year, is the rule of the thumb cast in stone?
Sara (Debt Camel) says
Rules of thumb are by definition not cast in stone. But with a default in the last two years which you have only just repaid you will struggle to get a mortgage at an OK rate from a high street lender.
If you will be in a position to apply for a mortgage soon, why can’t you repay this default sooner? That still won’t be good, but the sooner it is repaid the better.
Sunday says
Hi,
Though I can easily repay the amount, I see no reason why as the default (which happened due to my being unemployed then) won’t go off.
I will finish paying off my mortgage next month, what would the impact of this be on my credit score which on Experian is Fair but Poor on both Equifax and TransUnion (basically as a result of the default)?
I now need a bigger house and my intention is to rent the current one out to further shore up my future income.
Sara (Debt Camel) says
The reason to repay it as fast as possible is because it will look better on a mortgage application.
Paying it will not improve your credit score but mortgage lenders don’t care what your credit score is, they look at your credit history and make their own judgement about it – this includes how long ago all your debt problems were sorted by defaults having been repaid.
Your credit score isn’t going to improve when your mortgage ends.
Andrew says
Hi,
I got my default March 2019 on my Nationwide Credit Card. Limit was 4800 with the balance very close to that number so credit utilisation not good obviously. I’ve since been paying monthly to a debt collector 30 a month. But last month I just decided to pay it all off and be done with it. Now, I’m completely debt free (which feels good). My Experian score is Excellent but my Equifax is Poor. Experian just got updated whilst the Equifax hasn’t. I would be happy if Equifax matched the level of Experian being Excellent of course but Good is doable. Nationwide haven’t yet updated it on their end but when they do, it’ll be closed automatically. When this is done and the credit agencies have been updated to show this, how likely is it that I’ll be able to apply for a PCP or HP of 20,000 with low interest (preferably apply for a personal loan through Nationwide initially)?
Thank you for taking the time to read this and I look forward to your response.
Andrew
Sara (Debt Camel) says
it’s hard for me to guess.
Now you know how nice it is to be debt-free, do you really need to spend that much on car finance?
And I don’t understand what you mean by “preferably apply for a personal loan through Nationwide initially)”?
Andrew says
I’ve since reconsidered to get a PCP instead. The car value is 20000. I’m waiting for my credit report to be updated on all sides. It is nice to be debt free but the PCP is a loan secured against a car essentially so there’s little to no risk. How likely would it be to get a low interest rate with a PCP?
Sara (Debt Camel) says
the PCP is a loan secured against a car essentially so there’s little to no risk.
Little risk for the lender…
But for you PCP is a way to keep you in debt forever so at the of the contract you take out another one. effectively you pay all the high depreciation costs of the years years of a car and never get the benefit of the later years where the depreciation is low. It only looks cheap because of the large payment at the end.
I have no idea what sort of interest rate you can get.
Andrew says
What’s best then? HP or a loan from the bank?
Sara (Debt Camel) says
Often it the one at the lowest rate of interest.
Bianca says
Hello . I wanted to apply to buy a house . And i see a have a deafolt from november 2015 . If i will pay now full balance the deafolt will still appear for another 6 year ? Thank you!
Sara (Debt Camel) says
what sort of debt was that? Have you been making any payments to it?
Bianca says
It’s a phone not been paid. And I didn’t know about it. I have exparian credit report and is not showing there. But the agent ask me do to checkmyfile and there is. So I don’t know what to do. I don’t want to have debs at all. The default date is 15 November 2015. I was thinking to contact them and pay the balance in full. I have 610£
I didn’t make no payment till now :( I don’t know what to do. I’m really stressed
Sara (Debt Camel) says
Do you now agree you owe the money? If so then settling it is the best thing.
This loan will drop off your credit record in Niovember this year if you settle it in full or make a lower settlement offer which is accepted,
Bianca says
Ok , thank you 🙏! Tomorrow i will give them a call . I hope they will accept to pay the balance and they will not take me to court! 🙏 fingers cross. Thank you for your help
David says
It would automatically drop off in November anyway wouldn’t it as it’s 6 years from when the default is registered
Sara (Debt Camel) says
Yes it will
Bianca says
I paid today what was on that contract in full . They was very nice . So I hope everything will be ok. Thank you for advice.
Sarah says
I have a phone bill default from Sept 2018, £105 as a result of wrong information provided to me by customer service Never had any credit history before. I wanted to apply for a credit card but am not getting approved for any. If I agree to pay it, then how long would it take for my record to go clean and be approved for a credit card?
Sara (Debt Camel) says
if the default date on the bill on your credit record is Sept 2018, it will drop off your record in Sept 2024.
How many applications for a credit card have you made? Which cards?
Do you want a credit card so you can borrow or just to improve your credit rating?
Sarah says
Iv always done soft searches to check for eligibility. But none are eligible. I need it to borrow and improve the rating.
I don’t mind paying off the debt, do you suggest I pay it all at once or through an instalment plan?
Is it that because of covid credit cards are difficult to get?
Sara (Debt Camel) says
I suggest you pay it immediately.
If you have £20 or more a month you are able to save regularly then I suggest you look at LOQBOX https://www.loqbox.com/en_gb. That improves your credit score as the savings are reported as loan repayments. And you will not be credit checked.
Thomas says
Hi,
We are a long way down the line with purchasing a house now and have a mortgage offer from Lloyds. (Which is only 55%, the remainder is a saved deposit.)
I have a CCJ which is 3 years old and satisfied which they have accepted and had DMP’s with two
Companies. I satisfied these earlier on this year which they also excepted. They have now come back saying that their underwriter has just picked up on defaulted payments from 2015, 2016 and 2018 which causes them concern. These are a long time ago and satisfied. They have asked for explanations for these to keep the mortgage offer. There are various reasons such as being made redundant, a letter going to an old address etc. Do you think these will be acceptable?
We are only 2 weeks from exchanging so I would be mortified to now loose out on the house due to such old defaults.
Thanks so much for any help in advance
(Sorry to send this again, my email was incorrect on the last message)
Sara (Debt Camel) says
With a CCJ I guess you are not going to a high street lender and you will be paying a high rate of interest. I can’t really make a guess where bad credit mortgage lenders will draw the line at what is acceptable and what isn’t.
Mur says
Hello
I have 4 defaults 3 credit cards £900 £600 £250 & phone £250 from 2015 & 2016 I understand these will drop off in the next year or so . I have some credit (season tickets ) that I have paid in full I also have loqbox and my score is gradually rising all the time. I have had letters from the debt people offering me like 75% off the debts should I pay them partially or in full or not even pay them as they are about to drop off ?
Thanks in advance
Sara (Debt Camel) says
Just because a debt isn’t on your credit records doesn’t mean it is statute barred – the debt collector may still be able to go to court for a CCJ. So not paying them is risky.
There is no reason though to pay these debts in full – a partial settlement makes no difference to your credit score, it is just a flag which many lenders will not pay any attention to.
You could also think about asking for the CCA agreement for the credit cards, not for the phone debt – see https://debtcamel.co.uk/settlements-old-debts-cca/. But you may decide if they will give you 75% off this isn’t worth the hassle.
Lottie says
Hi I have a question,
So I have a default on my account which I thirdly check with my Equafax account. I had started paying some of the money back however stopped due to other debts. There is still about £700 worth of debt.
I have had this default on my account for nearly the 6 year period it’s just to come of my credit report at the end of July.
However I have recently received a letter saying that the bank which the debt is with have transferred this debt to another credit agency ‘Wescot’ so they are now responsible for the debt.
However after checking for updates on my credit report the outstanding default (due to end) is now marked as satisfied.
What does this mean? In terms of paying the debt still and been responsible? I’m really struggling to get my head round?
I won’t get another default will I as I have not yet broke or refused a payment plan that has not yet been set up? I have not contacted Wescot yet till I find out further information.
Sara (Debt Camel) says
is there a default date on the credit record? not a date you missed a payment but a specific default date, with defaults being marked every month after that?
Read again what you were sent – is your debt passed to Westcot for collection on behalf of the lender? Or has it been sold to westcot?
frogamn says
Brilliant read above I’m not going to lie. It’s all making more sense to me now.
Going straight to the point, so Broker is trying to dig out a 15% deposit mortgage and has said that I will need to settled a £2600 outstanding balance on January 2019 defaulted Natwest credit card to stand a chance.
I am desperate to move house as we’ve outgrown where we currently live and do not want to rent elsewhere which would be far more expensive and also reduce our savings. I plan to call Natwest tomorrow to see if they could accept an offer of say 50, 60 or 70% of outstanding balance to settle the default. my question is if they accept a figure less than outstanding, does it mean the account will be marked as satisfied and not settled? Is it even possible to pay less than what is owed and still have the defaulted account showing settled? In this particular instance, will the lender see satisfied and settled differently? At the moment, I am managing this debt myself, paying Natwest £65 every month. Please let me know your thoughts. Thanks very much once again
Sara (Debt Camel) says
Once a debt has been defaulted, it will be marked as satisfied, when it is repaid, or partially satisfied if you settle it for a lower amount.
The term “settled” is correctly used only for debts that haven’t been defaulted…
but your broker may be using the term “settled” loosely – you should check with him that “satisfied” will be ok and whether he thinks “partially satisfied” will make a difference.
If you are paying Natwest £65 month, that’s £780 a year. It’s pretty unless they will accept 50% to settle it – that is less than they will get back in 2 years…
What interest rate does your broker think you could get if you settle this debt?
frogman says
Thank you very much Sara,
I have just looked at my other defaulted credit cards which have now been paid off fully and you are right, ”Satisfied” is the term used after default. I am suspecting ”partial settlement” is what Natwest would use IF they are agree to settled with a reduced amount.
We’ve not got figures from the Broker yet but I expect it to be a ridiculously high interest rate because of my horrendous credit history and because we can’t get up to 20% or 25% deposit. , I have just sent my partners credit report (faultless) so hopefully should hear soon. I will be on the phone to Natwest shortly.
Thank you very much.
Sara (Debt Camel) says
They should use “partially satisfied”.
Sara (Debt Camel) says
Debt advisers never like bad credit mortgages. Too often they go wrong – your broker will say you can remortgage with a high street lender at a normal rate after a couple of years… but this may not be possible if
a) house prices fall and your 15% equity turns into 5% or zero
b) the mortgage market gets more difficult
c) anything at all goes wrong in your or your partner’s lives.
And the worse case we see people whose bad credit lenders increase their interest rates even when all other lenders are reducing theirs and who add on excessive fees for sending letters about late payments.
frogman says
Yes , It’s a dangerous move when you are struggling with debts and then trying to get a mortgage at the same time.
I also personally think the best thing is to wait until credit record has improved so that a ”normal” mortgage is possible.
In my case, it’s a 3.5yrs wait before everything is gone but we simply can’t wait for that long, we need to move house because we’ve outgrown the 2 bed house we live in currently, kids needs to be in a better environment and also get into better school. Currently paying £700 rent, this will shoot up to around £1,200 if we decide to rent elsewhere. I am suspecting bad credit mortgage repayment would be in the same region. We are ready to take the risk now and hope no major changes to both personally circumstances as well as housing market in general. We should never be in this position if not for my gambling addiction.
frogman says
So I have just spoken to Natwest and they have directed me to the debt recovery agency – Moocroft, who I pay the monthly £65 to. They said I should be able to discuss settlement figures with them.
At this point, it is safe to say that it makes no sense trying to pay the full outstanding. Better to just come up with an amount with Moorcroft and hope that looks better for mortgage application. It is going to fall off in 3.5years anyways
Frogman says
6.79% interest rate is what broker came back with
Sara (Debt Camel) says
ouch
Vinay says
Hi, need some advise,
I had a Credit card with Vanquish which I managed to default.
3 months ago I settled the account before it ended it courts but it still show as outstanding on my credit file.
What should be my course of action.
Since I don’t have any vanquish account details any more.
Many thanks
Vinay
Sara (Debt Camel) says
you should ask Vanquis to mark the debt as settled with a zero balance owing.
frogman says
I have just spoken to Moocroft, Partial payment option not available on my account so it’s the lot to settle the account.
Anne says
Hi sara, i have just looked at my credit report and even though i am paying several debt collectors monthly for a few years it still shows as defaulting every month? Is this correct?
Sara (Debt Camel) says
Yes. Once a debt has been marked as defaulted, it will. Always show a default. It will drop off when the the default date is 6 years ago. How long is that?
Are your payments affordable? What sort of debts were these?
Stephen says
Hi I have two defaults which went onto my credit report on dec 20 i satisifed 1 of them in April 21 then the other one will all be cleared in Aug 21.I have a satisified CCJ which comes off my credit file in Nov 21. i am looking to get a mortgage once the ccj drops off are my chances slim of getting one due to defaults.I have noticed my credit score is increasing quickly as i have cleared all of my other debt balances which i normally paid each month.
Sara (Debt Camel) says
Most mortgage lenders want you to have repaid the defaults at least a year before they will give you a mortgage.
Zara says
Hello,
I have 2 defaults on my account as of Nov 2017 at £6700 (the other is £0 which I don’t understand). I’ve mostly been unemployed during this time therefore I’ve not even started to look into paying it off.
You mention that after 6 years it could be completely written off, but then there’s also a chance of a CCJ being sent my way. Part of me wants to chance it and try my luck, but being me I know this won’t happen.
What would be the best way to pay this off? Directly through the creditor (Hoist) or through a DMP/IVA?
Sara (Debt Camel) says
What sort of debt was the 6700? who was the original lender?
The debt at £0, was that a debt to the original lender that you don’t think you cleared?
Are you unemployed at the moment?
How much a month do you think you could realistically pay?
Are these the only two debts you have, or do you have other problem debts as well?
Are you behind with any bills?
Zara says
The 6700 is with Hoist, a finance company who I think are hired by Barclaycard. The 0 is with Barclaycard, which they sold off to Hoist.
At the moment I’m employed full time, I pay some bills (water, internet, phone) and have never been behind with my payments.
I currently have a credit account with Very (catalogue shop of sorts) but I am not behind with their payments either. My payments with them should be all settle by the end of this month.
I think I’d be able to pay perhaps £100 a month as I live in central London so I don’t have much disposable income at the end of the month.
I also pay rent as well which I’ve also never been behind.
Sara (Debt Camel) says
OK so Barclaycard have sold the debt to Hoist, that is why the Barclaycard shows at zero. You don’t need to bother about that.
Have you ever been contacted by Hoist? Do they have your correct address?
A debt isn’t written off after 6 years – it *may* become unenforceable if it is statute barred. But very often you will find you are contacted in the last year bey the debt collector wanting to be paid.
You can’t have an IVA with only one debt.
And you shouldn’t consider an IVA when you have no assets to protect and unless your income is very reliable – otherwise if you can’t make the payments your IVA may simply fail.
Some options:
– you could ignore the debt and hope you are never contacted. This isn’t very likely to work. But when you are contacted you could then set up a payment arrangement – this only works if they know your current address, otherwise if you do nothing you may find they got a CCJ against you without you knowing.
– you could start to save up £100 a month so that if you are contacted you would have a lump sum you could offer to Hoist to settle the debt. Do you think you would have the self-discipline to do this?
– you could phone Hoist now and offer a payment arrangement. Perhaps not £100, rather less so you know you will be able to manage it without fail. See https://debtcamel.co.uk/arrangement-to-pay/
– you could write to Hoist and ask them to produce the CCA agreement for the debt. See https://debtcamel.co.uk/ask-cca-agreement-for-debt/. I can’t guess how likely that is to woprk. If they produce the CCA agreement you will have to make a payment arrangement.
It can be complicated to try to decide what to do. You could talk this through with National Debtline on 0808 808 4000. They could help you look at what you can really afford to pay a month.
Hakan says
Hi
I have a default with tsb for 506 pounds dated march 2020. They closed my account and They have given my balance to lowell who said they havent bough ot but rathet chasing on theit behalf. But on my credit report it shows up as defaults every month and is still showing as open. There is no wescott account on my credit report.
1. Is it removed 6 years from the first default date or 6 years from the date they close or settle the account?
2. Shall i pay tsb or lowell, and will it be shown as closed once i pay it
Thank you
Sara (Debt Camel) says
The debt will drop off 6 years from the first default date.
Pay Lowell.
Yes it will show as satisfied once it is repaid.
Zara Ates says
Hi I have a default of £0 and it has been satisfied, does this affect my credit score?
Sara (Debt Camel) says
The default was originally for some amount and you have now repaid it so this is at zero.
That is good for two reasons.
1) other lenders will be happier to lend to you now.
2) there is now no danger that you will be taken to court for a CCJ which would then damage your credit score more for another 6 years.
But settling the default doesn’t improve your credit score as the article above explains.
What is the default date on the credit record for this debt?
Zara ates says
Yes the default was £104 which I wasn’t aware of therefore couldn’t pay. It was recorded on 8th feb 2021. Even if it doesn’t improve it would it make my credit score go down?
Sara (Debt Camel) says
Settling the debt won’t harm your credit score.
That default is going to be on your credit record until Feb 2027. The impact of ggd default on your credit score gets a bit less bad after 2 years, and again after 4 years. But only a bit.
Why weren’t you aware of the default? Do you think this was unfair?
Zara ates says
Yes it is unfair as when I called up the company once I found out they told me a few times it was a mistake made by them and it will be removed. However a couple months later when I checked it was still there and contacted them after further investigations they told me it was my fault. I just hope it doesn’t make my credit score go down
Sara (Debt Camel) says
It will already have caused your credit score to drop, see https://debtcamel.co.uk/credit-score-change/
If you feel it is unfair, you should send them a complaint and explain why. Ask them to remove the default.
natalie says
Hi Sara
Thank you so much for this site the advise is extremely useful…
I have partially settled 2 defaults and one ccj
the 2 defaults where placed on my file in 2018 and 219 the ccj in 2016
I know the CJJ will fall off next year but will i have to wait till 2023/4 before even thinking of applying for home owership….
My goal is to have my credit file debts on my file cleared up before I am 50 (I’m 49!!!) But sick and tired of being sick and tired …
Sara (Debt Camel) says
how long ago did you partially settle the defaults?
natalie says
2016 one I paid last weds
2018 one I am paying next friday
2019 one i am paying friday 25th
all partially satisfied
Thanks
Sara (Debt Camel) says
It may be worth talking to a mortgage broker after the CCJ has gone and after all these defaults have been settled for at least a yeat – so late 2022? your credit record won’t be clean, but some lenders may not mind old defaults that have been settled for more than a year … its worth a conversation to see what the mortgage market is like at that time.
Nick says
My experience is that the mortgage market is quite sticky at present if you have any default on your file. A few months ago I had one satisfied default on my file which was nearly 6 years old. On that basis, Habito mortgage brokers would not touch me and offered to put me in touch with a bad credit broker. Once the default had dropped off it was a different story and brokers and credit card providers were falling over themselves to lend me money. NB I think it is unlikely that you will get a mortgage offer (or credit card) from any lender (including its subsidiaries and affiliates) if you have ever had a satisfied (i.e. part paid as full and final) default with them.
Sara (Debt Camel) says
The mortgage market is changing fast.
Pre pandemic it was NORMAL to be able to get a mortgage with a many high street lenders if they defaults were more than 3 years ago and had been repair more than a year.
In another year we could be back at that point again.
Michael Staines says
Don’t feel out off by your credit record regarding a mortgage, there are specialist brokers and lenders that could likely find you a deal..
As with all things there will be hurdles, such as minimum 25% deposit, the interest rates would be uncomfortable also. The biggest no no in mortgage lending is repossessions and secured loan defaults..
I would certainly recommend speaking to a good adverse broker in your situation… you will know the good ones because firstly they will be able to access your credit file directly with your consent and they won’t charge fees until completion!
Sara (Debt Camel) says
That is true, but after a year you may be able to get a mortgage from a normal high street lender at an OK rate. Not a bad credit lender at a high interest rate.
Natalie daley says
Thanks for the advise.
I’m going to hold out to 2024/5 god willing healthy and in employment. As I mentioned it’s a case of clearing up my credit score post divorce life and bad decision making
But at least I have started my snowball debt repaying which I am proud of :-)
Lee says
Hi
My wife was unaware she had a default. Of the three main credit agencies it shows as £1 default on one, £0 default on another and doesn’t even show on Experian. Surely this is a mistake? It was from when she fully paid off a credit card.
Sara (Debt Camel) says
It does sound odd. I suggests she complains to the lender and asks for the default to be removed.
hannah kelly says
Hello,
I am in the process of getting a mortgage. I have been previously approved but the underwriter now has questioned a default ( I didnt even know i had) for £190.00 from 2019. I paid it one the spot once realised. Does this now effect my mortgage? will the underwriter still have issues?
Sara (Debt Camel) says
That depends on who you are applying to. Did you go through a broker?
Hannah Kelly says
Hi Sara, yeah going through a broker and they haven’t been the best at keeping us up to date with the process
Sara (Debt Camel) says
ah. Well if they are any good, they should answer your question and if it’s going to be a problem with the lender you have applied to, line up another lender who may not mind.
It is a pity your broker didn’t tell you to check all three credit reference agancies for problems before making an application.
Hannah Kelly says
Morning,
Yeah, I don’t think they are actually that good. What are the chances of a 95% lvt with this default?
Sara (Debt Camel) says
Probably not great – many lenders restrict 95% mortgages to people with a squeaky clean credit record.
Tash says
Hi – looking for advice. I have a number of defaults on my credit file. Earliest from 2018 most recent 2020. I have been paying all of these at an agreed amount per month. I have been gifted some money and want to use this to pay off the defaults. However, it isn’t enough to cover the full amounts of them all combined. How would you approach prioritising which ones to pay. Little off all? The more recent first? I understand the six year rule but not sure what to do
Sara (Debt Camel) says
Have any of these debts been sold to debt collectors?
Have any of the creditors offered you a settlement so far?
The agreed monthly payments, how large are these? Are the payments easily affordable at the moment or a bit of a struggle?
T N says
Hello Sara.
I am a long time reader and you have helped me numerous times but I feel a little embarrassed of my situation this year.
My working hours reduced throughout the pandemic in 2020 and i was earning 30% less by the end of the year which strained my finances as I usually used about 90% of my pre-covid income on bills and debts anyway, had all available payment holidays when my income reduced, then I lost my job in Jan this year and had minimum income until July when I found another suitable Job.
By this point 11 defaults are recorded on my credit file, 2 have threatened letter before action, a further 1 has started court proceedings.
My income now is starting increase to the same as I used to earn pre-covid but I am still 6 months behinds on all my other debts and the court one alone would wipe out a months wage. I am unsure where to start or what my options are to minimise damage longer term. Any advice please? Thank you
Sara (Debt Camel) says
I think you need debt advice on your full situation. Do you have priority debts – rent/mortgage arrears? council tax arrears? etc?
natalie says
Thanks for this Sara.
I have paid off some old debts and closed accounts as satisfied with Lowell and Nat west today my credit score has gone down.
Is this normal? On clearscore it states that ‘status will improve on next report’ which will be on October 30th….
Sara (Debt Camel) says
Closing accounts normally has a temporary small bad effect on your credit record.
Nats D says
Ah ha any idea how long the bad effect lasts ….
Just you know when you’re trying to rebuild feels like you are going backwards
Thanks for the reply x
Sara (Debt Camel) says
a few months. Just ignore your credit score in this situation. You have to settle debts showing with missed payments or defaults – that makes lenders much more likely to lend to you. lenders do not use the credit score that you can see.
Nats D says
Perfect thank you
I’ll just continue on this path 😃
Thanks for replying
Mercy says
Hello Sara,
First of all thank you for your amazing advice throughout this website. I have 1 Default (4 years old) & 1 CCJ (6 years, will be removed in Aug 2022). Both have been paid off since 2019, I’m looking to get a mortgage in March 2022. I have no other debt, credit score is (522 on Clear Score) What would your move be on this?
Sara (Debt Camel) says
It is MUCH a harder to get a mortgage with a CCJ even when it has been paid off. Talk to a good broker now about this, don’t wait until March. If possible it may be better to wait and apply for a mortgage 6 months later when the CCJ is gone.
Matthew says
Hi. I’ve just checked my credit file and noticed a default from Barclays Bank for a current account. I have submitted a request for all my information to be sent to me. Having looked through this there is no clear default letter. Would I stand a chance of getting this default removed?
Thank you
Sara (Debt Camel) says
What sort of problems have you had with the current account – are you still using the account?
Matthew says
There was a overdraft on the account which just stayed overdrawn as it was a account I rarely used. The address they had for me was also incorrect however I have a barclaycard which has the correct address so didn’t receive any corrispondence. I went to use the card but didn’t work as Barclays closed the account. As mentioned I requested all my info from them and no letter was sent saying they were defaulting it
Sara (Debt Camel) says
did the correspondence include a letter saying they had closed the account?
Matthew says
Yes it did. Titled ‘Termination Notice’
With ‘ Issued in accordance with Sections 76(1) and 98(1) of the Consumer Credit Act 1974’
Under it but no mention of default..
Sara (Debt Camel) says
Banks are entitled to remove an overdraft and close an account without warning.
There is no law which says that a bank has to tell you they intend to record a default on your account.
You could complain saying that you had given them your new address for your Barclaycard so you had assumed this would also cover your bank account (If that is correct?) and ask them to remove the default. I don’t know how likely this is to work.
Natasha says
Hi, I have a default that is almost 4 years old from the company that bought the debt from my credit card company, is it worth paying off the default? Also, the original debt was older than 4 years, can I get them to move back the default date? Thank you :)
Sara (Debt Camel) says
If you don’t pay it off or make an monthly payment arrangement, the debt collector that now owns the debt may well take you to court for a CCJ. So yes, you need to do something about this.
The creditor may accept a settlement offer, see https://debtcamel.co.uk/debt-options/less-common/full-final/
If you have other problem debts, it’s good to talk to a debt adviser about your whole situation, not try to tackle them individually. I suggest you phone National Debtline on 0808 808 4000.
When did you miss payments to this debt? What sort of debt was it and how large is it?
Natasha says
It’s about £1500 but I am making payments towards it with the debt management company. I am just wondering if I’m better off paying it off in full so it shows as settled
Sara (Debt Camel) says
this won’t make a difference to your credit score.
Do you have other debts in your DMP?
Natasha says
Thank you so much for your reply :) no, just this one. I pay £20 a month towards it at the moment as agreed with the company
Sara (Debt Camel) says
ok, so it’s a payment arrangement rather than a DMP (much the same – but a DMP is set up by a company like StepChange.
If you could come up with say half the amount, they may well accept that as a full & final settlement offer.
Natasha says
If I do pay half and it is marked as partially satisfied, will that have a positive impact on my credit score? We are trying to rent and my credit score is making it difficult. Thank you so much
Sara (Debt Camel) says
No, there is nothing you can do that will increase your credit score becasue the default stays. But if you can pay half, then that is going to save you the other half later… and mean you are immediately £20 better off a week… and other lenders will be more prepared to lend to you…
I said nothing – but there is one thing, if the loandn or credit card or whatever (what was it?) was “unaffordable” and you can win an affordability complaint against the original lender, then the default would have to be deleted.
Natasha says
It was a capital one credit card. They lent my £1500 when I was earning around £15,000 a year so it actually wasn’t massively affordable if I’m honest and in fact I think they let me take it out before I was even earning that much and was still on some benefits
Sara (Debt Camel) says
was that the starting credit limit, or did they increase it to that? If they increased it, had you only been making the minimum payments?
Natasha says
From what I remember, that was the starting credit limit. I made the minimum payments and then set up a payment plan with them where the suspended charges and interest when I fell behind on my payments. This was a couple of years before the default was registered by the debt management company
Sara (Debt Camel) says
Well you may as well try an affordability complaint. Expect Capital one to reject it and send it to the Ombudsman. there is a template here https://debtcamel.co.uk/refunds-catalogue-credit-card/, change that so it says they should never have given you a card with such a high limit at the start.
Nicola Taylor says
Hi Sara, what are the chances of getting a mortgage with 3 defaults? All paid off and will be off my report in September 2024. Plan on saving for a mortgage deposit this year and apply for a mortgage in the middle of next year. No other credit problems. I have a credit card which is below 50% utilised. I hoping due to the defaults having less that a year before they are removed from my report I stand a good chance?
Thanks
Sara (Debt Camel) says
So the defaults will all be over 3 years old when you apply. And ill all h\ve been satisfied for more than a year.
That is good. It will also be good if you can get that credit card utilisation down below 30%… can you stop using the card and may more than the minimum to it from now?
Obviously I have no idea what the mortgage market will be like in 18 months time, but you are doing all the right things… nake sure you apply through a broker, not direct to a bank.
Nicola Taylor says
Thanks for the reply. I plan on paying the cards off to less than 30% and hopefully use on a basis to be able to pay the full balance each month. Is it worth talking to a broker now or when I’ve got a deposit?
Sara (Debt Camel) says
When you are getting close to the deposit, I suggest.
simon says
hi,
so i owe 15k on my 4 credit cards which have all been defaulted as of 2018. i maybe be able to get a loan in from work for around 12k which i will use to partial settle these payments.
my question is. if i get this loan in from work which would be 12k over 5 years, my 4 credit cards would be settle and i would only have this one loan. i would then look to save 1k per month for the next 24 months. do you think going through a broker i would still have a chance of getting a mortgage if i have potentially 25k saved, defaults would have around 18 months to drop off but would have been partially settled for 2 years and i would still have 3 years on my work loan ?
Sara (Debt Camel) says
I can’t really guess if you would pass a mortgage lender’s affordability checks. It might be good to talk to a broker.
Is this loan interest free?
simon says
Hi Sara
no the loan is with interest. its just i can either save a little then right to offer settlements but this may take 18months to get them cleared then another 24 months to save for a deposit then i would only have a mortgage as debt but i was thinking if i get the work loan out i would have the credit cards partially settled for over 2 years and could start saving now for 24 months for a mortgage.
the payment back on the loan is around £300 (maybe less) a month over 60 months, i know i will be paying about 4k interest but over 5 years thats nothing and if it helps me in starting to save now for a mortgage i think it would be a good thing but just need some advise
Sara (Debt Camel) says
so the extra interest will be more than the discount for early settlement that you are hoping for.
I think you do need to talk to a broker about this. If you can’t get a mortgage in a couple of years time, or could only get a mortgage t a high interest rate, you would be much better off by not getting this loan.
simon says
Hi Sara
sorry should have mentioned that 3.5k of that loan from work is towards a car. so 10k would be to settle my 15k debt i owe on the 4 credit cards and 3.5k towards the new car.
I see what you mean because of the interest but i’ve been in debt pretty much all my life so i’m always used to paying someone something, so paying £300 a month over 60 months i am not sure i would miss.
i’m just thinkinig if they gave me that it will give me the chance to save 1k a month for the next 2 years to have 24k saved up for a mortgage in July 2024 and the fact that my debts would have been settled for at least 2 years and i will only have 1 year left before all my defaults drop off.
does that make sense?
Sara (Debt Camel) says
but i’ve been in debt pretty much all my life so i’m always used to paying someone something, so paying £300 a month over 60 months i am not sure i would miss.
that may not be the way a mortgage lender sees it. I am sorry but I can’t guess what a mortgage lender would say which is why I am saying you need to talk to a broker now, before you take this loan.
simon says
ok cool, appreciate your advise as per usual. thanks sara
Simon says
Hi sara
Got an appointment tomoro with the mortgage adviser about what you said.
Had a rethink though. What if i got that loan from work (13.5k) over 18months. I pay off everything i owe and i start saving from May22 until July24. (Should have just over 22k in July24)
The credit cards would all be partial settled for 26months, the work loan would have been settled for 8 months and the defaults will be over 5 years old (dropping off around May25)
I know you say you can’t guess on what a mortgage adviser or broker would say but if possible my question would be.
Would that look better the fact that most things would have been partial settled for 2 years rather than saving and the offering amounts as everything may have only been partially settled for around 8-12months if i don’t get the work loan
Sarah says
Hi, after reading these posts I’m really really hoping you can help.
My partner has a defaulted mortgage account which is not settled. This is due to come off his credit file in September 2022 and we hope to apply for a mortgage.
This was not his fault, his ex wife stopped paying the mortgage 8 years after he moved out and 5 years after they divorced and the both signed the financial order to say the house and mortgage were her responsibility. . (However in the eyes of the mortgage company, it was still his debt). The house was handed back to the mortgage company, not repossessed, so it shows as a defaulted account rather than a repossession.
When the default comes off the report, will it matter that it wasn’t settled?
This whole thing has just been so so unfair and we are really hoping for a glimmer of hope. The rest of his credit file is squeaky clean. He has never missed a payment he has been responsible for.
Sara (Debt Camel) says
Secured loan debts do not always become statute barred after 6 years.
Had your partner been asked to pay this debt by the lender?
Sarah says
No, he has not been asked to repay. He has not heard anything since he signed the paperwork to hand the house back to the mortgage company. If they were to contact him, he would most definitely dispute it, but for the moment we are focussing on trying to get a mortgage ourselves.
We are hoping to apply for a mortgage this year as we were under the impression it will ‘fall off’ his credit file, although understand the debt doesn’t disappear.
Will it still come off his credit file even if it is unsettled?
Sara (Debt Camel) says
it will 100% come off his credit record.
The question is, could the mortgage lender go for a CCJ? or sell the debt to a debt collector who would? And should you tell a lender you are applying to about this old debt?
I suggest you talk to National Debtline on 0808 808 4000 about this, so you are fully informed.
Sarah says
Yes, we intend to take advice.
Given the way the debt was incurred, it seems very unfair. After the divorce, he perused a civil case through the family court to try and get his ex wife to adhere to the financial order as he was aware that the link remained as long as his name was on the mortgage.
Do you think there is any way this could be challenged. There must be some protection for people in his situation who have tried to handle things hut have come up against ex partners who just quite simply do not care. He only lived in the house for just over a year and all of the debt was accrued many years after he left.
So why I’m saying is that if they did decide to peruse him for the money, do you think there is any mitigating circumstance that could prevent him getting a CCJ? He does have a legal document in the financial order I’m which he took on a joint loan (which he paid off in full and early for his own savings) and she took the house.
Sara (Debt Camel) says
This is why I am suggesting you talk through the situation with National Debtline. They can give advice on an individual case, I can’t.
Sarah says
Okay. Thank you very much for your advice. We will most certainly call them and hopefully there will be something, anything, we can do. We just desperately need a bigger house now as our children get older.
Andy says
Hi, I have 2 old defaults that both fall off my report in the next 12 months. Iv been making regular repayments to both for the past few years in line with an agreement with the creditors. Neither default be full satisfied however when they reach 6 years and fall off the report.
My intention is to continue to make the repayments until the balances are fully repaid, but given that the defaults will have fallen off my report, will the repayments and outstanding balances still show on the report to the respective companies?
Many thanks
Andy
Sara (Debt Camel) says
The creditors you are paying will rely on their own records to see what your situation is, not your credit report.
Will the remaining balances be large? What sort of debts were these?
Lucas says
Hi so I have one default about a year old currently saving up for a mortgage for my first property looking at leaving around 3 years would that one default still be a big issue being 4 years old?
Sara (Debt Camel) says
Has it been repaid?
Khan says
Hi dear I had one default from Barclays card 12 years old for 5500.. after 5 years I start paying small amount paying to debits company till now but from last 2 months hoist Finance is pushing me to pay more.. my question is if stop paying them now r they still be able to take me to court for ccj or not. And I had ccj already back 2016 from another credit company which is going to finished june
Sara (Debt Camel) says
Yes they can – as you have been paying, this debt will never become “statute barred” – that is too old to win a court case.
BUT read this https://debtcamel.co.uk/ask-cca-agreement-for-debt/ – it may be that Hoist can’t produce the CCA agreement and in that case you can stop paying as the debt would then be unenforceable in court.
Have you repaid the other CCJ? Or are you just saying it will drop off your credit record? What is the rest of your current financial situation like – are you behind with any bills? Any other problem debts?
Khan says
Thanks for your reply yes I paid all the other ccj but only left with this one Barclays card. So the best is I should settle this account with hoist Finance…
Sara (Debt Camel) says
Have you read that other article? For an old card there is a real chance that Hoist may not be able to get the paperwork. Which would mean you don’t need to settle it.
Up to you if you think this is worth trying.
Khan says
Ok so I should ask hoist for CCA agreement if they unable to produce then I should stop after couple of months paying them.. currently I am paying 35 pounds every months them but if I ask them for CCA agreement will the not get worry or they might increase my payment from 35…or it’s my legal right to ask??
Sara (Debt Camel) says
It’s your legal right to ask.
If they can find it, then yes, they may ask you to pay more. But they are already saying that, aren’t they?
I am afraid there is no clear cut option here.
Khan says
I use to pay 10 pounds but from last 2 months I start paying them 35 which the have decided.. I LL ask them today for CCA agreement..thanks for quick replys
Khan says
Hi I spoke to hoist today for CCA agreement 1st they asked me so many questions why need it and what for but then I told them it’s my legal rights to ask for then finally they said we LL request that from Barclays card so once we get that then we LL send you and they it’s takes 3 months time and its gonna be copy not original
Sara (Debt Camel) says
A copy is fine if it is a “true copy”.
BUT have you asked for this in writing? If not, you should do this, and send them a cheque for £1. See https://debtcamel.co.uk/ask-cca-agreement-for-debt/ which has a link to a template letter with the exact wording you should use.
Khan says
They hoist said they don’t have the CCA agreement. They have to request that from Barclays once the get it from them then the will send to me via email or post. So should I send them 1 pound chq now or wait once the get it from Barclays??
Sara (Debt Camel) says
You need to send Hoist the letter and the £1 now. Then if they can’t get the CCA from Barclays, the debt 9what sort of debt was it?0 is unenforceable in court/
Khan says
Hi Sara I wrote a letter to hoist 4 days ago asking for CCA agreement and also I send them one pound postal order but the written back the one pound postal order saying this rules is no more required but for the CCA agreement the asked me the hold my account until the get documents from Barclays.
Sara (Debt Camel) says
that’s fine. Just wait and see what happens.
Bru says
Hello,
Does a debt timer start running from the date you last made a payment or from when the account is defaulted?
Made a payment march 2016
Account defaulted October 2016
Is the account statue barred or not following the above info?
Many thanks
Sara (Debt Camel) says
See https://debtcamel.co.uk/statute-barred-debt/ which looks at this subject.
Bru says
I read that and it says:
“The six-year period still runs from the date of your last payment or written acknowledgement of the debt.”
The default date doesn’t matter then right? It’s what I thought just want to find if I’m wrong because I have had no contact or payments well over 6 years now.
Sara (Debt Camel) says
I have now rewritten that FAQ so it is clearer.
The main bit you need to read in the article is this https://debtcamel.co.uk/statute-barred-debt/#What_is_a_cause_of_action
What sort of debt are you talking about?
Bru says
Actually I’m a bit confused now to what type of loan it was, I had a loan from Curry’s (finance) not sure how that is qualified.
The last payment was back in March 2016 but Cabot says that the default was given in October 2016 so the debt isn’t statue barred, following the article you gave they might be right by the court judgment but that was 2019 not 2016 does it still apply?
What’s your take?
Sara (Debt Camel) says
The 2019 court judgment applies to all cases, not just those where the default is after that date.
please talk to National Debtline on 0808 808 4000 about your situation.
Elizabeth says
Hi Sarah,
I have 6 defaults (latest one June 2019). I have just earned enough money from a business that I have set up to get rid of this debt and save a deposit for a home. I understand that paying off the debts is important and that it will take a year from the final settlement date for lenders to view me more favourably. My question is do lenders care if i have made a partial payment settlement or is it more beneficial to how they view my risk level if I have settled it in full?
Sara (Debt Camel) says
see https://debtcamel.co.uk/dmp-partial-settlement/ which looks at this situation.
Daniel says
Hi,monzo closed my account in march this year. I had an overdraft with them,they closed the account and they mark it like default.I told them i will make a payment every month.At the moment my credit score is down with ~700 points (on experian), if i will pay in full the amount,in how much time my credit it will go from very poor to good on experian ?
Sara (Debt Camel) says
was there a reason they closed the account? Did they give you any warning? CAn you afford to pay this in full, what other debts do you have?
Also are they marking the account as a missed payment so in arrears? Or is there a default date showing on the account – if there is a default date, what is it?
Daniel says
they give me an email “we will close your account in **** days “. Maybe in few weeks i can afford to pay in full. I have 3 loans and 2 credit cards. At the moment i’m using 82% from my credit limit. On experian is showing only “default by monzo bank”
Sara (Debt Camel) says
you need to know the date of the default. If you use the MSE Credit Club report, it will show it.
Had you been permanently in your overdraft for all or almost days of the month for a long while?
Daniel says
unfortunately yes,because i had some family problems.Last email what they send to me it was on 14 Jun with the message “ We’ve defaulted your account”
Sara (Debt Camel) says
ok so how long had you been permanently in this overdraft? Months? years? I am asking because if you have a reason to make an affordability complaint it may be possible to get the default removed.
before they closed the account, did they contact you and ask if you needed any help?
If there is a default on your credit report (and you need to check and find the date on the report, not rely on that message being accurate) it will remain on your credit record for 6 years and repaying the debt will not improve your credit score.
However repaying the debt will look better to another lender and will avoinf any problem with a CCJ. But if you have to stretch to repy it, it may be better to just pay an affordable amount each month.
Daniel says
i already started to pay them monthly. They send me email first time they close the account with an link to some debt advice companies.I’ve been like a year on overdraft
TOM RICHARDS says
IN 2002 I HAD A AMERICAN EXPRESS CARD WHICH WAS CLOSED THROUGH NON PAYMENT 2500.00GBP THEY SOLD THE DEBT TO A COMPANY AND I STARTED PAYING THEY THEN SOLD IT TO CAPQUEST 18 YEARS AGO AND I HAVE BEEN PAYING 10.00GBP PER MONTH DD NEVER MISSED A PAYMENT THE DEBT HAS BEEN TAKEN OFF THE CREDIT RATING SOME YEARS AGO I NOW HAVE RECEIVED A LETTER SAYING MY REMAINDER IS 186.00GBP BUT IF I PAY 146.00GBP THEY WILL CLOSE THE ACCOUNT I KNOW THAT I MUST HAVE OVERPAID IN THAT TIME SPAN WHAT IS MY BEST WAY FORWARD
Sara (Debt Camel) says
ask the creditor for a statement of account showing what you have paid to the debt and any charges that have been added since 2002.
Sammo says
I’m just curious, can one credit agency show stuff another doesn’t? I use credit karma religiously, so I go based on that… if I had 2 defaults on there, would I have 2 defaults on all of them or could another credit reference agency be showing a default that credit karma aren’t? So I really have 3. I just don’t want a potential default or ccj I don’t know about, because credit karma aren’t reporting it. I’m paying BPO, does that mean I have a default I’m not aware about?
Also this is my worst one, Argos financial services have been adding interest for 3 months now (over £100) and I just can’t pay it, they’re impossible to deal with in my experience. Will they eventually send that to collections? Also once everything is in a payment plan with a debt collector… if I keep paying monthly, the agreed amount. Will they take it further, like bailiffs or just continue happily with the amount agreed?
Sara (Debt Camel) says
yes – there are 3 credit reference agencies in the UK. Credit Karm only reports data from one of them, TransUnion. Many lenders only report to 1 or 2 of the r CRAs so at the moment you cant see any data from a lender who doesn’t report to TU. It is possible you have problems on other CRAs that dont show on credit Karma. See https://debtcamel.co.uk/best-way-to-check-credit-score/ for how to get free reports from the other CRAs.
CCJs however should be shown on all credit reports regardless of who the original lender reported too.
If you have missed payments or are in a payment arrangement this may show as arrears, a payment arrangement or a default. You have to check to find out. A default hurts your credit rescore more, but the problem will drop off after 6 years. A payment arrangement will stay on your credit record until 6 years after the debt is repaid… so that can be much longer. So if its going to take a long while to clear your debts, it may be better to get defaults early on…
Have you asked Argos to freeze interest?
This will probably go to collections at some point or they may just sell it to a debt collector. Debt collectors can be nicer to deal with sometimes than the original lender!
If you have an agreed payment plan in place it is very unlikely the creditor will go to court quickly, indeed they may never do this. Until they have gone to court and got a CCJ, they cannot send in bailiffs.
Sam says
Yeah I’ve asked Argos to freeze interest but they won’t. So I’m racing to get a job now, even though mentally I’m probably not ready. The fear of been homeless one day, because of my credit score and defaults etc is causing me all manner of problems. I have quite a few debts and all of them are in payment plans with debt collectors except this Argos one. I know it won’t boost my credit score, but for my own health I do plan on getting a job and pouring my wage into them all for a year. Get rid of them by 32 years old, then build upon my shockingly bad credit score for about 8 years, so when I’m 40 years old I may be able to move abroad and rent, no issues.
Sara (Debt Camel) says
why did they refuse? did they run through a budget with you? did you tell them about your health problems?
If you have a lot of debts, then talk to StepChange about a debt management plan – then you don’t have to deal with your creditors, StepChange will. And Argos will almost certainly freeze interest when there is a DMP. A DMP has much the same effect on your credit records as a series of payment arrangements.
If you intend to move abroad it probably makes little or no difference what your UK credit score is like.
Sam says
If I set up a dmp, shall I stop payments to anything I have in payment plans now, or will they stop when a sump becomes active?
Sara (Debt Camel) says
See https://debtcamel.co.uk/stop-debt-payments-before-dmp/ for some background then I suggest you talk to StepChange about a DMP and the practicalities.
Sam says
Thank you. I just think I’m okay at home, but I’m getting older and I am fearing been homeless one day. So I’m just going to focus on getting a job, paying the debts off then building credit afterwards, with the hope that in 9 years, I may have a decent enough credit file to rent, despite all the defaults and payment plans I have in place. I could ask a million questions so I’ll stop now. It’s just really giving me thoughts I’d rather not have.
Damo says
I’m sick with worry! So I’m going to ask one more question. My credit is bad, 300 and something with a couple of defaults, likely more if I don’t get a job soon. If I go get a job and pay everything off before I’m 32 in two years, by the time I’m 35/36 the defaults will have dropped off too. Will I have a half decent chance of building my credit score from the age of 32 to 40? I’m on the cusp of finding a job, I can have all these debts and stuff gone by 32, I’m that motivated. My biggest fear is been homeless because of my mistakes in the past. I suppose what I’m asking is, should I be worrying about this? 10 years is a long time isn’t it to pay everything off, defaults drop in 6 years, so from 35 years old I’ll have a clean credit record. To be honest it makes me sick with worry at this point. I think I just need some reassurance from someone who knows what they’re talking about, that this isn’t a dreadful plan in my head, to ensure my future.
Sara (Debt Camel) says
Defaults are better than payment arrangements because they drop off after 6 years. With payment arrangements they show for 2 years after the debt has been settled. So when you already have defaults it’s actually better if the rest of the debts default so your record is clear sooner.
Once your debts are cleared you can start rebuilding a credit score even while the defaults are still on there. It is slow at first but products like LOQBOX really help – then when the defaults go you have a great score. And the defaults themselves hurt your credit score less as they get older.
If you can clear your debts in 2 years with a DMP that would be great. Clear in 4 years may be more realistic and will still be really good, much better than where you are now.
Jacqui says
Hi, we are trying to get our finances in order and my partner has a default on a loan that will be removed in august 2023. The account has been closed. He has been offered a settlement figure. We are not sure if it’s worth doing if the default is being removed anyway. When the default is removed, will the balance still show? If it does and we have only paid a settlement amount will this have a negative impact on his credit file? Also will that bank having his history on their records not want to loan in the future regardless of our actions?
Sara (Debt Camel) says
What do you mean by “the account has been closed” – has it been sold to. Debt collector?
Jacqui says
No, it has just been closed. The bank have decided to close it.
Sara (Debt Camel) says
What did they say when they closed it? This is unusual- unless they have sold it to a debt collector
Jacqui says
It was frozen as my partner had some financial problems at the time and he was getting a statement each year. He doesn’t remember getting a letter informing him of the account being closed. Having spoken to the bank, they are unable to tell us the likely hood of being approved for future borrowing if we pay it all off or partially.
I have a similar issue that has been resolved but as I have the history with the bank, even though it is resolved they are aware and have said it may hinder borrowing in the future.
Sara (Debt Camel) says
6 year after a default, the debt will drop off his file whether it has been settled in full, partially, you are still making payments or nothing has been paid.
You need to assume he will not be able to borrow more from the bank in the future whether you settle it in full or accept the settlement offer. The bank will always be able to able to see the previous problems from their own records. Plenty more fish in the sea – apply to a different bank.
I can’t say what will happen if you don’t accept the settlement offer as I don’t know why the bank closed the account or what they mean when they say they have done this. It may be you don’t have to pay anything. It may be they will sell it to a Debt collector. I don’t know if it is now too old for him to be taken to court. You could talk to National Debtline on 0808 808 4000 and ask for their advice.
Rachel says
Hi Sarah, I have a defaulted loan which I took out in 2017 with 118 money. I haven’t made a payment since January 2018 due to financial difficulty. I called them to explain my situation and the man on the phone just told me to contact them when I was in a position to pay anything. I haven’t contacted them or made payment, they haven’t contacted me either since apart from this month. I had an email saying the below.
Your loan agreement dated 8th October 2017 with us is now terminated. You will have received a letter detailing this.
What Happens Next?
Your full loan balance of £3187.18 is now due and payable.
To help you pay this back to us, we will collect this balance over 60 monthly instalments of £53.12 per month.
Your first payment will be taken by Direct Debit on 7th February and then on the first Friday of each month. If your payment due date falls on a weekend or bank holiday, your payment will be made on the next working day. Please make sure you have the right amount in your bank account to meet these payments.
What does this mean? Will they just take payments from my bank? I’m with a new bank since then and they haven’t got my details.
Sara (Debt Camel) says
they can’t take payments if you have changed banks! But they could sell the debt to a debt collector who would take you to court for a CCJ.
what is your current financial situation like?
do you think this loan was very difficult to repay right from the start in 2017?
Rachel says
Im not in employment at the moment. I’m in no position to pay it. I presume it is still enforceable even though they have terminated the agreement? I don’t understand why they would terminate the loan agreement. I haven’t received the letter that they said they have sent either just the email.
Sara (Debt Camel) says
do you have other problem debts you have been not paying? Do you any payments arrangements with current debts? Do you have any arrears on important bills?
And was this 118 loan difficult right from the start (this may sound irrelevant but it isnt.)