“This default is destroying my credit score – how do I get rid of it?”
This is a very common question!
It’s sometimes asked when people’s finances have improved and they are trying to clean up old problems on their credit history as fast as possible. Or sometimes the default feels unfair in someway
I will look at various cases to see what – if anything – can be done for each of them.
But first, there is no magic trick that an “expert” can use to do this. Don’t ever pay a firm that says they can sort this for you – their claims are often exaggerated, they can’t do anything that you couldn’t do yourself.
Contents
The rules about when debts disappear from your credit record
There are three credit reference agencies (CRAs) in Britain – Experian, Equifax and TransUnion. They all apply the same rules about reporting defaults.
How long a debt stays on your record depends on whether the record shows a default date or not. The two rules are:
- a debt with no default date stays on your record for six years from the date when it is settled. This applies whether it was settled in full or partially;
- a debt with a default date stays for six years from that date. You may have paid it in full, made a full and final settlement, not paid anything to it, or still be making payments… none of these matter, the debt is still going to drop off after six years.
So the default date is an important piece of information for you to know. Don’t guess! Check your records with all three CRAs so you know exactly what they say.
“I agree with the default, but six years is too long!”
If you just had a temporary problem, perhaps you lost your job, or couldn’t work when you were unwell, but after a year you were sorted and back making payments it can seem very hard for this black mark to stay on your credit file for so long.
But there is nothing you can do to make the default go away sooner.
You can add a Notice of Correction to your credit file to say why the problem happened.
As the default gets older, some lenders will be less worried about it. But for some creditors, eg many high street mortgage lenders, any default, even five years ago, may result in a rejection.
Usually the best you can do is settle the debt as soon as possible. This doesn’t get rid of the default and doesn’t actually improve your credit score, but it will mean that more lender are willing to give you credit.
“The default was added very late”
The rules say that a default should normally be when you are 3-6 months in arrears compared to what your normal payments would have been.
If a creditor has added a default later than this, it won’t be deleted, but it should be changed to be earlier. That means it will drop off sooner. See “What should the default date for a debt be?” which describes how to get your record corrected.
“It’s not fair – I only missed one payment”
In this case, no default should have been added as you were never three months in arrears! Write to the lender, then appeal to the ICO if the lender refuses to correct it, see the above article about what the default date should be for details.
“The lender agreed to reduced payments but still added a default”
This can feel very unfair, but legally they can do this when the arrears reach 3-6 months.
This applies if you have payments arrangements with one or two lenders or a debt management plan through a DMP firm. See How does a DMP affect my credit rating for more details.
And although you may hate that default, it may actually be better for you than an Arrangement To Pay (AP) marker on your file! A defaulted record disappears after 6 years, an AP marker stays for 6 years after the debt is settled.
“The lender is adding a new default every month!”
This may make your credit report look dreadful but it is normal and it doesn’t matter:
- the later defaults don’t make your credit rating worse because lenders’ scoring systems only look at the first one;
- the debt will drop off 6 years after the first default, the later ones don’t affect this.
“A debt collector has added a later default”
They shouldn’t have done this.
A debt collector can add a new record, but it should have the same default date as the original lender. Write to the debt collector and ask them to correct it, and then appeal to the ICO if necessary.
“I never owed this money”
If the debt isn’t yours, you should tell the lender and ask them to remove it from your credit record. It’s not just your credit record that matters here, you don’t want to be chased for money by the creditor or be taken to court for a CCJ.
If you recognise the debt but you don’t think you were ever in arrears with it, ask the lender for a statement of account to see where the problem is.
“I was never properly informed about the debt”
Arguments can occur between you and a creditor if you feel they didn’t properly write to you about the debt, explain what the debt was or the size of it. Perhaps you moved house and the creditor carried on writing to your old address even though you notified them you had moved – this sort of thing.
If you paid the debt promptly as soon as you know about it, you could ask the lender to remove the default. Pointing out that you previously had a good history of paying their bills on time and that you don’t have other credit record problems can support your argument. You may have more luck going to the relevant Ombudsman rather than the ICO if the creditor refuses.
“The debt isn’t enforceable”
Sometimes a lender will admit – or a court may decide – that a debt isn’t enforceable. If this is because it is statute barred, then a default should have been added to the debt over six years ago so you should ask for the default date to be changed so that it is earlier.
But if it is unenforceable for other reasons, the debt still exists and the lender may refuse to delete it from your record because you do still owe the money.
“I should never have been given the loan!”
Until a few years ago I would have said you will find it hard to make this argument work… but since then many thousands of payday loan defaults have been deleted from credit records when people have won affordability complaints.
Lenders should have checked you could afford to repay a loan before they gave you the loan. A loan is only “affordable” if you can repay it without hardship and without having to borrow again or get behind with bills.
If a proper check would have shown that the credit wasn’t affordable for you, ask for a refund of the interest you paid and for any defaults or late payments markers to be deleted from your credit file. See Affordability refunds for info on how to make these complaints for different sorts of credit including payday loans, Provident, guarantor loans, car finance, Brighthouse, large bad credit loans and even catalogues.
Hundreds of thousands of these complaints have worked. Here is a comment from a reader who made a successful complaint against Satsuma, a payday lender:
I accepted Satsuma’s offer on 2nd January and received the cheque on 17th January. The negative information already removed from my credit file as well which made my credit score jump by 100 points :)
“I was in an abusive relationship”
Many people, usually women, have been pressured to take out credit for a partner or had a joint account with an abusive partner. Financial abuse is now recognised as a serious problem and most banks now subscribe to the Financial Abuse Code of Practice published in 2018.
If you feel the debt and the default resulted from an abusive relationship, I suggest going to your local Citizens Advice and asking for their help to see if the debt could be written off and the default removed.
Summary – when can you get rid of defaults
If the default doesn’t comply with the “3-6 months arrears” rule then you can ask for it to be corrected.
But if the default is in line with the “3-6 months arrears”, there often isn’t anything you can do about it except wait for it to get older and then drop off.
Pay a defaulted account to help credit score?
Is an unknown debt on your credit file?
Improve your credit score for a mortgage
Eric says
Many thanks for the reply (on a Sunday too).
I am about to write off to Barclaycard now. I also have a reply ready for Link, with copies of the Default Notices enclosed.
This has been going on for a while now – I requested the removal of the two defaults in Jan this year via email. Link didn’t reply to start with so I wrote off to them (via email) in May and got the response saying that they hadn’t been defaulted – this was received in June.
I also wrote off to the Financial Ombudsman and the ICO in February after the required time had passed. Both have written back saying that they are investigating but this is taking so long.
I used to work in the financial services industry but left about two and a half years ago. I am employed now but there are many more opportunities available in financial services but these defaults are having a negative effect on me getting a job. I have had a couple of interviews where I have been virtually offered the job at the interview and then suddenly not got it – presumably when they do the credit check (one was at a credit reference agency).
I was even looking at getting legal representation to get the two defaults removed but I have no idea where to start looking for this.
Regarding the debts, they are still there – about £2k in total. I am paying token amounts on a monthly basis off the total but it will take until the year 2100 to pay them off in full.
Again, many thanks for replying.
Eric
Sara (Debt Camel) says
When the defaults are added so the debts are no longer on your credit record, you may want to think about asking Link to produce the CCA agreement for thx debts, see https://debtcamel.co.uk/ask-cca-agreement-for-debt/
Lindsay says
Hi Sara
HSBC offered me a managed loan to consolidate my personal loan, credit file & overdraft into one product. I’ve had a few issues with them recording payments on my personal loan as missed payments not an arrangement which they have said they will fix them & make sure my credit card was showing an arrangement as well, but this weekend i got an alert that they have reported my Credit Card as having defaulted completely!
As this was a consolidation loan I don’t think this is correct. When I spoke to them I was in an arrangement for my Personal Loan and the person I spoke to said the managed loan was going to avoid the personal Loan defaulting so therefore it was a better option for me, but mentioned nothing about the Credit Card defaulting as a result.
I have never missed a payment on my credit card, the qualifying payments for my managed loan went to my credit card, and now I am paying off the Entire credit card balance on my managed loan. Nothing on the call when I set up the managed loan or in any paperwork mentions that the other credit product would default.
I don’t think this default is right? It’s making me very anxious that they won’t agree to remove it as they have been quite difficult to deal with through this whole managed loan set up process – they take weeks to respond to simple queries.
Any advice very welcome!
Sara (Debt Camel) says
I think this is well worth complaining about.
What is the interest rate on this managed loan?
Lindsay says
Thanks for your quick reply Sara.
it is 0% so it is different to the terms of my original credit product but HSBC offered me this managed loan as a way to help with my financial situation (i have been a customer of theirs for 15 years). If they had explained that it would cause one of my credit products to default i would have never accepted the managed loan and would have found a way to pay the Personal Loan payments in question (i only had 6 months worth of payments left to make and was in a reduced payment plan).
Sara (Debt Camel) says
ok, so a complaint saying this and take it to the Financial Ombudsman if they don’t uphold your complaint and get this sorted. The effect on your credit record should have been explained in a clear way before you took the loan.
Lindsay says
Thanks Sara I will do this. Hopefully HSBC resolve but if not i will go to the FOS.
Blooming says
Hi Sara
I will appreciate your advice with a debt I have with Link for a Barclaycard credit card, My question is in two parts. I requested for a copy of the CCA in February this year and in response to a letter and phone calls asking me to contact them to arrange payment, I called Link this morning to ask why they had not responded to my letter, the lady asked me why i needed it and was I disputing the debt. I told her that i did not need a reason to ask for the CCA and I was not disputing the debt (wrong choice of words) and I was not discussing the debt just that I needed a response to my CCA request. She kept asking (badgering more like) was I disputing the debt and will i be making arrangement to clear the balance. When I didnt budge, she said that she will put in a request and it could take 6 to 8 weeks. My question now is, the account was opened in 2004 and defaulted (i presume) in 2008 when I went into a DMP. Link put a default on the account in 2016 but reading similar posts, I want to know if I should wait for the response of the CCA request before contacting Barclaycard to put the correct default date but I am scared that this may uproot the original CCA. I hope i am making sense. Apologies for the long posting. Thank you
Sara (Debt Camel) says
I want to know if I should wait for the response of the CCA request before contacting Barclaycard to put the correct default date but I am scared that this may uproot the original CCA.
yes you need to contact Barclaycardto add a default.
I understand why you are worried that this may “turn up” the CCA. I think this is unlikely, but it may be sensible to wait a few months.
Blooming says
Thank you Sara, i will wait a few months just to be on the safe side
Jordan says
Hi Sara
I got in touch last week when rumours of Sunny going into administration we’re doing the rounds regarding the Ombudsman final decision on my complaint.
They said Sunny had to remove both defaults and write of the debt. Where do I now stand with the defaults? Can I show the credit agencies the email from the Ombudsman as proof and get them removed that way? I don’t particularly want to wait years for them to be removed like in the WDA and Wongs cases.
Thanks
Jordan
Sara (Debt Camel) says
I suggest you first ask Sunny customer services to do this,
Bobby says
I’m hoping you can help.
In 2012 when i was just out of uni i got myself into quite a lot of debt. I was given a nationwide loan(£16,000), £2000 overdraft & £5500 credit card. This quickly became affordable and the loan/overdraft defaulted in July 14 (recently removed from my credit file) and the credit card defaulted in July 15. Even though i stopped making payments to all 3 at the same time. I recently wrote to Nationwide explaining that i felt it was unfair lending as my salary was only c. £20k per year. Secondly i asked for the default date of the credit card to be brought forward in line with the others. Nationwide have responded as follows to say the disagree and it wasn’t irresponsible lending and applications are assesed against strict underwriting. Re the default they said because i had entered into a stepchange plan they agreed to not default the account for 1 months. This has confused me as the other two accounts were also in the plan but defaulted 12 months earlier. I will be in a position to make a full and final settlement of 40% in about 4 months. However is it still worth pursuing my complaint? I’m trying desperately to improve my finances and credit score and bringing forward the credit card default date would help.
Sara (Debt Camel) says
How large are the debts at the moment? How much have you paid to them so far, to Nationwide direct or via StepChange?