Can a default be removed from your credit file?

April 12, 2016

When lenders decide whether or not to offer you a loan, it is the information held on your credit file that forms the basis of their decision. This information also helps to combat fraud, as your identity can be verified if you are on the electoral role.

Problems can arise if you fail to make repayments to credit card providers and other lenders, as each payment default is registered on your credit file. Other information also appears on your credit record, such as county court judgments against you, and any insolvency proceedings that you have entered into.

This information will remain on your credit file for a period of six years, and generally cannot be removed.

What is a default?

If you have failed to make payments to a lender, they may take steps to recover the debt, either in part or in full. Default notices can be issued in relation to loans regulated by the Consumer Credit Act, which basically means store card accounts, credit cards, personal loans and payday loans.

Lenders often decide to take action after three to six months of payments have been missed, and most lenders provide a minimum of two weeks in which to make payment in full.

If you fail to repay what is owed, the lender will issue a Default Notice which is registered on your credit file, potentially with all three UK credit reference agencies. Once the default has appeared, it will remain for a period of six years, and affect your ability to obtain credit or other forms of borrowing in the future.

Defaults and credit-scoring by lenders

The period of six years during which a default remains, reflects the credit-scoring process by lenders. Once the six years has passed the default will naturally ‘drop off’ your credit file regardless of whether or not you are still repaying the debt, as it is deemed to be no longer relevant for credit-scoring purposes.

Once the default marker has gone, it cannot be re-registered by the lender for that particular debt.

What if you see a CCJ and a default for the same debt?

If you have had a county court judgement made against you, it is a good idea to check that a default marker hasn’t also been placed on your account for the same debt. If it has, although you cannot have one removed, what you can do is include a Notice of Correction against the entries on your credit report, stating that the two entries relate to the same debt.

This Notice of Correction can be up to 200 words. It will be seen by lenders, and may influence their decision about granting borrowing in the future.

Scotland Debt Solutions can help you escape a spiral of debt that often starts with a lender’s notice of default. Contact one of our expert team to discuss your options – we offer an initial meeting free-of-charge.