In this comprehensive guide I’m going to show you how to remove a default. I’ll cover:
What is a Default?
What is a Notice of Default?
Notice of Default after 1 missed payment?
What does it mean when you get a Default
How long do defaults stay on your account?
How to get a default removed from your credit file?
When can a default be removed from a credit file?
Let’s get started
Chapter 1
What is meant by a Default?
A default occurs when you enter into a financial agreement, and you obtain credit and as a result of that you have missed a payment to the creditor. The agreement is regulated by the Consumer Credit Act 1974 which means that the creditor has to follow certain rules and procedures. The financial agreement will cover certain contracts and products such as mobile phone contracts, credit cards, pay later credit, loans, mortgages authorised by the Financial Conduct Authority Financial Services Register | FCA
Chapter 2
What does it mean when you get a Default Notice?
It is important to recognise that a Default Notice differs from a default. A Notice of Default is a letter and not reported on your credit file. So, a default notice in itself will not affect your credit score if you respond to it and make good your re-payments. However, if the missed payment has been recorded and reported to the three credit reference agencies CRAs by the creditor, your credit score will decrease. And if your account does default, a default will be recorded on your credit report and lower your credit score.
Chapter 3
What happens after 1 missed payment?
After 1 missed payment, the creditor will send you a Notice when you’ve not been making payments to warn you that you are behind on your payments and that your account may default. The Default Notice will be sent for 3- 6 months by the creditor. The creditor will ask for full payment and give you 2 weeks to catch up. If you don’t pay, your account will default. You may be chased by a collection agent, or you may be taken to court to recover the debt
Chapter 4
What happens when someone defaults?
The creditor can file a default on your credit file. The default will show other credit lenders that you missed payments and could have serious consequences such as:
Having to pay additional fees, late penalty fees, increased interest
Lower your credit score, which will affect your ability to obtain credit in the future
Having the agreement terminated and the full outstanding balance demanded by the creditor
Impact a job or other services that rely on your credit rating
Chased by a collection agent
Taken to court to recover the debt
Chapter 5
How long do defaults last?
Defaults will stay on your credit file for up to six years from the date they were registered by the creditor, regardless of whether you pay it off or not. Be mindful that the older the default the adverse impact on your credit score will reduce over time. After 6 years, the default will be removed from your credit report and will no longer affect your credit score.
Chapter 6
Can you ask for a default to be removed?
Yes, you can ask a creditor to remove a default in some cases from your credit file. Such as:
You did not receive a Default Notice from the creditor
An admin inaccuracy has been found, which has caused a mistaken identity
You dispute the default.
You’ve agreed a payment plan with the creditor and kept to it
You have paid off the default in part or in full before it was registered with the CRAs
Chapter 7
When can a default be removed from a credit report?
If you see an error on your credit file, you should contact the creditor direct and explain why the default is inaccurate and request for the default to be removed from your credit report. Provide supporting evidence as each case may vary depending on the circumstances. Common reasons:
Mistaken identity
Identity fraud
The creditor has been paid in full or in part before the registration of the default with the CRAs.
The creditor stopped taking your repayments without advising you, either by not contacting you at all, used an incorrect address or telephone number.
The default was added very late which was more than 6 months after the missed payments. The Data Protection Act requires a creditor to process your information fairly and accurately. You were given credit that you could not realistically repay. The creditor has a duty to carry out responsible lending practices by checking on your income, expenses and ability to repay.
The debt is not enforceable due to a faulty credit agreement, or the debt is beyond 6 years or there is a debt relief order in place.
You were in an abusive or coercive relationship you can file a complaint with the Financial Conduct Authority Indeed a recent report centred around “Surviving economic abuse” Seen-yet-sidelined_SEA_2023.pdf (survivingeconomicabuse.org) calls on the government to work with credit reference agencies to explore the potential of introducing Restitution Orders as operated in Canada which can address a victim-survivor’s credit history or rating, as a solution to reflect the victim-survivor’s own creditworthiness and not the abuse they have experienced.
Remember the above is not an exhaustive list. If the creditor does not respond or cannot be contacted to remove the default, you can send a complaint to the CRAs and request for the default to be quashed. This means that the default will be hidden when lenders complete a credit check in the future.
Now it’s Your Turn
I really hope that you’ve enjoyed my Definitive Guide to Defaults
I’d like to hear from you. Which tip from the guide are you interested in?
Maybe you’re considering repaying a creditor as you’ve recently received a Default Notice
Or maybe you’re considering disputing a creditor for an error that has occurred on your credit file
Alternatively you maybe interested in our services
Either way let me know by leaving a quick message for a free no obligation call below
Winnie Onyekwere
Mediator LLB LLM
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