How to Remove a Default from Your Credit History
, by Matt Stevens
Every year, numerous individuals find themselves missing payments on various forms of credit such as credit cards, personal loans, and payday loans. These missed payments, if not rectified promptly, can lead to defaults being recorded on your credit history.
A default on your credit report can significantly impede your ability to secure a mortgage. As such, we've put together this article to explain the process of removing defaults from your credit history while providing essential insights on the matter.
What is a default?
A default arises when a lender opts to terminate your account due to consistent missed payments. This scenario can unfold with various service providers, including banks, mobile phone companies, and utility suppliers.
The occurrence of a default isn't contingent on the amount owed, be it a nominal sum or a substantial debt. Typically, it manifests after a pattern of missed payments spanning three to six months, though the timeline may fluctuate based on the lender's exact terms.
How long does a default stay on your credit report?
A default remains on your credit report for six years from the date of its occurrence, regardless of debt settlement. Once removed, it cannot be re-registered. While visible to mortgage lenders during this period, its impact diminishes with time, becoming less significant to their decision-making processes as it ages.
Can a default become a CCJ?
Should you neglect to address a default, the creditor reserves the right to pursue legal action to recover the owed sum. In such circumstances, you might find yourself facing a county court judgement (CCJ), which is deemed a more severe mark on your credit profile compared to a default.
When can a default be removed from your credit history?
There are two primary instances under which a default can be removed from your records. Firstly, if the default has been resolved and six years have elapsed since its registration. And secondly, if the default was inaccurately registered, either due to an error or fraudulent activity.
As mentioned, defaults persist on your credit reports for six years, irrespective of settlement. However, some credit reference agencies may lag in updating their records. If a default exceeding six years still appears on your report despite being settled, or is present by mistake, you have grounds to request its removal.
How to remove a default from your credit report
1. Exercise restraint in taking on additional debt:
Consider postponing any new finance applications if feasible. Delaying until the default is resolved could enhance your chances of securing financing in the future.
2. Obtain your credit reports:
It's vital to review your credit reports to identify which credit reference agencies are reporting the default. You can do this using our free credit check tool (with a £14.99 per month subscription after a free 30-day trial). The trial and subscription can be cancelled at any time.
3. Start the default removal process:
If you possess a valid reason to contest the default, reach out directly to the credit reference agency responsible for reporting the issue. Present your case and provide supporting evidence, especially if the default has been settled. In instances of suspected fraud, communicate with the lender responsible for the default placement to facilitate an investigation.
Can I get a mortgage if I have a default?
Having a default can indeed hinder your borrowing prospects. Lenders scrutinise your credit information when you apply for a mortgage loan to gauge your repayment likelihood. A default signals past repayment difficulties, which inevitably raises concerns among lenders.
Consequently, getting mortgage approval might pose challenges, as lenders adhere to stringent criteria to assess your affordability. Nevertheless, it's not impossible to secure financing with a default on your record. Exploring credit options designed for individuals with adverse credit histories, such as specialist mortgages, represents a more than viable avenue.
We at The Mortgage Genie are a team of expert mortgage brokers with access to an extensive pool of lenders, meaning we can get you a product which is perfectly aligned with your individual financial circumstances and has competitive interest rates, whether or not you have bad credit.
Give us a call at 01915809890 and we'll match you with a professional tailored to your specific situation. And why not see how much you could borrow up to today by using our mortgage calculator?
