A default can have a big impact on your credit report, and can be recorded for just a few pounds to several thousand. I find there is quite a lot of confusion around default so I’ve put together some answers to common questions.
What is a default? A default occurs when an account has had consecutive missed payments and is then closed by the lender.
There is no set number of payments that can be missed before a default is recorded. When the lender considers that the relationship between you has broken down it can record a default.
A default date will be recorded on the account and it will be kept on your credit report for six years from the default date. After this time it is removed from your report automatically even if the full amount isn’t paid.
Some lenders will still send us monthly updates on a defaulted account. This doesn’t change the default date or when it comes off the report.
I have a default on a credit card from 2010. This was due to disappear from my report sometime this year, but debt has been passed on to a new company who are now reporting on my file and threatening a new default for the same debt. Can this be true?
I understand your concern. The new company can register a default under their name but, importantly, the amount and date must be the same as the original entry. And the original entry should be updated with a marker to make it clear the debt has been sold on, so that anyone looking at your credit history in the meantime isn’t misled into thinking there were two separate debts. I suggest you keep an eye on your credit report and, if the second company does register a new default with a new date, let us know so we can dispute this for you. You can find a step-by-step guide of how to tell us if an entry on your credit report is wrong and what’s wrong with it in this previous Ask James answer. (February 2016)
You can find archived Ask James questions arranged under subject headings such as ‘applying for credit’, ‘credit and debt’ and ‘fraud’ at the main Ask James page.
On my report my HSBC account is defaulted and this is incorrect – what should I do? It should be changed to ‘satisfied’. I believe this information is preventing me from opening a bank account anywhere.
I recently defaulted on a number of monthly payments due to being hospitalised as an emergency. I had to have triple heart bypass surgery, which has kept me from sorting my finances over the past few months. After paying off all default payments I was relying on one of my credit cards to pay off an upcoming bill. Today I received a text advising me that my credit had been reduced on this card. Trying to reinstate the credit, I was informed that my report showed the defaults and credit couldn’t be reinstated. With defaults now addressed and considering the position I was in, can Experian update and reflect my position, as it is needed quite urgently and would be greatly appreciated right now.