When can you get a default removed from your credit record?

“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 for some reason.

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.

When debts drop off your credit record

How long a debt stays on your record depends on whether the record shows a default date or not.

The two rules are:

1. a debt without a 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;
2. 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.

Having a debt drop off your record because the default was over 6 years ago is the same in practice as having the default deleted.

Situations where the default should be removed

I am not saying these will be easy, but these are the most likely cases to succeed.

“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.

“I was never in arrears”

If you recognise the debt but you don’t think you were ever in arrears, ask the lender for a statement of account. That may show where the problem is. You can then check against your bank statements to see if you made other payments that weren’t recorded.

“The lender stopped taking the money”

Sometimes the lender stopped taking the monthly payment by direct debit or by continuous payment authority. You may have assumed the debt was repaid and only found out later a default had been added to your credit record.

Here it is the fact that the lender stopped taking the payments that matters. You may be able to get evidence from your bank that you did not cancel the DD or CPA until months later. If it was the lender’s error, you should not have a default and you can ask for this to be removed.

“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 Financial Ombudsman if the lender refuses to correct it, see the above article about what the default date should be for details.

“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 Financial Ombudsman if necessary.

“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 should be changed to be earlier. That means it will drop off sooner, and your credit record will be clean sooner.

See “What should the default date for a debt be?” which describes how to get your record corrected. For many people this is just as good as getting the default deleted and it can be a lot easier.

Cases where you have to win the argument to have it removed

“The loan was unaffordable”

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 more money.

If a proper check would have shown that the credit wasn’t affordable for you at the time you applied, ask for a refund of the interest you paid and for any defaults or late payment markers to be deleted from your credit file.

You can also win complaints against credit cards and catalogues if your credit limit was increased stupidly high when you were only making minimum payments. And against overdrafts when you are in the overdraft for all or almost all of the month and this has been going on for more than a year.

See Affordability refunds for how to make these complaints. There are different articles for car finance, large loans, credit cards (including catalogues and store cards) and overdrafts. There is a free template in each article that you can use.

Hundreds of thousands of these complaints have worked.

Sometimes the lender will only remove “negative information” such as defaults and missed payments. Sometimes the whole credit record will be deleted.

Here is a comment from a reader who made a successful complaint against a payday lender:

I accepted Satsuma’s offer on 2nd January and received the refund on 17th January. The negative information was removed from my credit file as well which made my credit score jump by 100 points :)

“I was never properly informed about the debt or the arrears”

You may feel the creditor didn’t explain what the debt was or how much interest would be added.

Perhaps you moved house and the creditor carried on writing to your old address even though you notified them you had moved. That is an error by the creditor.

If you paid the debt promptly as soon as you know about it, you could ask the lender to remove the default. Point out that you previously had a good history of paying their bills on time and that you don’t have other credit record problems. This can support your argument. You may have more luck going to the relevant Ombudsman if the creditor refuses.

“The debt isn’t enforceable”

This may not be easy.

Sometimes a lender will agree a debt isn’t enforceable because it is statute-barred.  In this case a default should probably have been added to the debt more than 6 years ago. So you can ask for the default date to be changed so that it is earlier and then the debt will drop off your record.

When a creditor cannot produce the CCA agreement for a consumer credit debt it isn’t unenforceable in court. See Debts – why, how & when to ask for the CCA agreement for details – this does not apply to all types of debt. But here the debt still legally exists and you owe it even though you do not have to pay it. As a result, the default will not normally be deleted.

“I was in an abusive relationship”

Many 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 2018 Financial Abuse Code of Practice.

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.

When it is very unlikely a default will be removed

“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.

“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 payment arrangements with one or two lenders or a debt management plan through a DMP firm.

And although you may hate that default, it may 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.

“Six years is too long!”

If you just had a temporary problem it can seem very hard for this black mark to stay on your credit file for so long.

But there is legally 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 unless it has been settled for several years.

Usually the best you can do is settle the debt as soon as possible. This doesn’t improve your credit score, but more lenders may be willing to give you credit.

When the lender has gone bust and can’t be contacted

This is a special case.

If the lender will not respond to the Credit Reference Agencies, then you can ask the CRAs to “suppress” the credit records. If this happens, although the records are still there, they will not be shown to any other lenders making a credit check on you.

Read How to correct credit records if the lender has gone under in detail and see if you think it can help you.

Do NOT try to do this if the lender is still going. Or if it is the early stages of an administration – then it is better to put in a claim for unaffordable lending. If your claim is upheld, the default will be deleted, and often the administrators just delete the credit record as it is simpler.

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