“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.
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.
“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.