Can I get rid of a default from my credit file?

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. Sometimes it is 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. If there are practical steps, then you can take them yourself. 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.

The rules about when debts disappear from your credit record

There are three credit reference agencies (CRAs) in Britain – Experian, Equifax and Call Credit. They all apply the same two rules that determine when a debt is deleted from a credit file:

1. a debt that doesn’t have a default stays on your record for six years from the date when it is settled. This applies whether it was settled in full or partially;
2. a debt with a default stays for six years from the default date. This applies whatever happens to the debt after the default – 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. I suggest you should check your records with all three CRAs so you know exactly what they say.

“I agree with the default, but six years! That’s ages!”

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.

There is nothing you can do to make the default go away sooner. You can add a Note to your credit file, which explains why the problem arose. And 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 actually improve your credit score, but it may mean that lenders, especially mortgage lenders, are more prepared to give you credit.

“The default was added very late”

The principles that govern what should be reported to the credit reference agencies 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 so it will drop off your file sooner. See my article “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 compared to what you should have paid reach 3-6 months. What you have set up is called a “debt management plan” even if it was just an informal agreement with one lender. See How does a DMP affect my credit rating for more details.

Also although you may hate that default, you will often be better off with it, rather 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 is normal. What matters is the original default date, it will drop off six years after that. The later defaults don’t make your credit rating worse because lenders’ scoring systems only look at the first default.

“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”

In this case, you need to ask the lender to delete either the whole record (if the debt never belonged to you at all, it is some form of mistaken identity) or the default (if it was your account but you were never in arrears).

“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 became aware of 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 two 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, see this article from Experian about Wonga loans.

If you think you had payday loans that were “unaffordable” (you could only repay them by borrowing again each month) ask for a refund of interest you paid and also ask for any defaults or late payments markers to be deleted from your credit file. How to ask for a payday loan refund looks at these affordability complaints in details – the template letters in that article have worked for thousands of people.

Here is a comment from a reader who made a successful complaint againt 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 starting to be recognised as a serious problem, see this report from Citizens Advice. 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 isn’t normally anything you can do about it except wait for it to get older and then drop off.

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