Do I Have a Default? How to Find Out

Posted by Jamie Mackenzie Smith in Dealing with Debt on 29 March 2019

For lots of lenders, coming across a default on your Credit Report is a troubling sign. It’s certainly more serious than a missed payment or arrears on your file, which are likely to have less of an impact on your chances of being approved. A default represents a key moment in the eyes of a lender: it shows that on a previous credit agreement you stopped being a borrower and became a debtor.

The difference between a borrower and a debtor might seem subtle, but to a potential lender it demonstrates that you are much more likely to default on any new borrowing they extend to you, and as a result are a less attractive customer.

If you have been issued a Default at any time in the past six years, it should appear on your Credit Report. Any Defaults that are older than this will have dropped off your report, and no longer have an affect on your Credit Score or ability to take out credit.

To see the UK's most detailed Credit Report, you can try checkmyfile free for 30 days, then for just £14.99 a month afterwards.

Warning signs of a Default

Before you can Default on a credit agreement, you will first need to miss a certain amount of payments – you won’t be given a default immediately following a missed payment. This can vary from lender to lender, but in many cases six months’ worth of arrears need to be accumulated before a default is lodged on your Credit Report. Warnings will be issued well in advance of this, as lenders will want to work with you, not against you to try and get your account back on track, but when all else fails, they won’t hesitate to formally issue one.

Before a lender can lodge a default against you, they legally have to serve you a Notice of Default detailing any and all amounts owed, giving 14 days to pay any money owed. You can either pay the amount or dispute the case with the lender if you believe that you do not in fact owe the sum they’re claiming. If you do neither of these things, you will automatically be issued a Default.

In rare cases, if a Default has been issued as a result of fraudulent credit activity, there is a chance that you might not receive the Notice of Default, if the criminal has managed to set up the account at a different address. If this is the case, you may only find out about the default and the fraudulent credit usage when you come to check your Credit Report.

What happens next?

Once you’ve been issued a default, that’s far from the end of it. Until you pay the lender the sum they’re claiming for, you will still owe them that amount (unless you can prove unequivocally that the debt doesn’t belong to you). If you don’t take steps to clear the debt, lenders are able to apply for a County Court Judgment to be issued against you in a further attempt to reclaim monies owed.

When applying for credit, a Default will limit the number of potential lenders that would consider your application greatly, but having a CCJ on your Credit Report will significantly reduce that number further. Not only that, but because court judgments are public records, they will be visible on the checks carried out by landlords and employers, and in some cases can impact insurance quotes given by comparison sites as these also use credit searches.

How does a default appear on my Credit Report?

You can check for the presence of any Defaults on your checkmyfile Credit Report under Payment History, alongside the payment history of each individual credit account reported in your name. A Default appears as a D marker, and any arrears that lead to the default will appear as 1, 2, 3, 4, 5 respectively.

How a Default affects your Credit Score

A Defaulted account is likely to have a negative impact on your Credit Score for the entire time it is active on your file.

When a Default drops off from your Credit Report, you might find credit score increases as a result. While you shouldn’t base your idea of your creditworthiness on your score alone, it does effectively show how positively a lender might view your application.

How to remove a Default from a Credit File

Like most other pieces of information that are recorded on your Credit Report, if a Default is accurate it is unlikely that you will be able to remove it. That’s because the lender has a legal obligation to report your information as accurately as possible for any future potential lenders to find. As defaults are such a serious marker, it is in other lenders’ best interests to be fully aware when one or more has been issued.

Defaults will be automatically removed from your Credit Report six years after the date of first being recorded, so this may be your only solution for getting rid of it.

Thankfully, as long as you manage to maintain the rest of your credit accounts well, once a Default is removed from your Credit Report, you’re likely to see your ability to get new forms of credit improve straight away. You can see the exact date that a Default is due to be automatically removed by checking your Credit Report.

If you haven't already, you can try checkmyfile FREE for 30 days, then for just £14.99 a month afterwards. You can cancel online at any time and you'll get full access to the UK's most detailed Credit Report for the duration of your trial.

Updated by Jamie Mackenzie Smith 29/03/2019

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