People often want to know when their credit records get updated and how long a repaid loan or a closed credit card will keep on showing there:
- you may want your record to show you owe less if you want to apply for more credit or a mortgage; or
- .you may be keen for a debt to disappear if you missed some payments or defaulted
Lenders update debt records once a month
A lender will update each open debt account every month, to show whether a payment was made on time and what the new balance is.
If you have repaid a loan or a cleared a credit card, the lender will mark the debt as settled (or partially settled/satisfied/partially satisfied) and set the outstanding balance to zero.
As this is only done once a month, your credit record could be updated from a few days to a few weeks after the lender receives your money – Experian describe the process here. There isn’t a way to speed this up.
Defaults drop off 6 years after the default date
If you have defaulted on a debt, it will be deleted from your credit record six years after the default date. It will go whatever happened to the debt afterwards. If you were making low repayments and six years later you are still doing this, or if you repaid the debt in full after two years or you had a full and final settlement agreed – the debt will still drop off after six years.
This makes the default date an important fact. The rules say that a default should be registered when your account is between three and six months in arrears. What should the default date be? looks at this in more detail, including how to ask the lender to correct a default date.
Everything else drops off 6 years after the settlement date
All other accounts will stay on your credit record for six years from the settlement date.
If there were no problems with late payments, this is usually good news. Other lenders like to see that you took out some credit and repaid it on time, it shows you were a “responsible borrower”. The only exception here is payday loans – mortgage lenders don’t like you to have had payday loans at all in the last year or two even if you repaid them on time because they are seen as a sign that you were struggling.
But if you were in debt management and your record was marked AP (Arrangement to Pay) this may seem unfair – you may be wondering why you bothered to make repayments if the black marks on your credit file are going to be there for another six years after you repay the debt… The answer here is that if you were only making low payments, your account should have been marked as defaulted. See the above link to the article on default dates for details and how to ask the lender to add a default date.