Default Notices

If you’ve found a default on your credit report or received a default notice from your creditor, the information on this page should help you make sense of what it is, and what it means for you.

A default is a marker on your credit file which indicates that you have missed payments to the account and usually means that the account has been closed or you can no longer use it to access credit.

A default will usually be registered once you have missed three to six payments but this will vary between lenders/creditors. 

A default notice is a warning letter from your creditors which notifies you that you are behind on payments and your account will be in default if not paid. You will usually receive a default notice when you’re behind on your payments or when you’ve missed a payment, or paid less than the full amount for 3-6 months. A default notice will only be issued in relation to a debt which is regulated by the Consumer Credit Act like a personal loan, credit card, store card or hire purchase. For some debts you could still get a default without receiving a default notice first, such as mortgages or utility bills.

A default does affect your credit file. Once a default is applied this will show on your credit file for a period of 6 years and will in turn reduce your credit score. At the end of the 6 years, the default and the debt will both disappear from your credit file completely. Once it has been removed, it can’t be re-registered. 

Firstly, it’s important to understand that there is no universal credit score. Different Credit Reference Agencies (CRAs) have different top scores and different bandings. Credit scores give you an indication about whether you’re likely to be accepted for a credit application, but lenders don’t actually use them. They will have their own internal processes for deciding whether to lend to you.

A default will impact your credit score quite significantly when it’s first applied but, as it ages, it’s impact will lessen, and you will see your credit score start to improve after a couple of years.

Paying the default won’t improve your credit score (unless you pay it within the first month, in which case it will be removed completely) but it may improve your chances of getting credit further down the line. You will also get less contact from your creditor if you’re paying something towards the debt.

The only way to stop a default is by paying what the lender wants you to pay. This is fine if you can afford to clear the arrears and maintain the minimum payments going forward but, if you can’t, and particularly if you’re struggling with other debts as well, trying to stop one debt from defaulting will not help you in the long run.

If you have problem debt which you can’t afford to pay, it may be better to accept the defaults now, knowing that they will disappear completely in 6 years, than potentially cause a longer term impact by missing payments to several debts over a long period of time.

It will be harder for you to take out products such as a loan, credit card, a new mortgage and even open certain bank accounts when you have a default. 

When creditors see a default on your credit file they will assume that there’s a higher risk of you not paying them back. This is because you’ve struggled to repay money in the past so it will make it difficult for you to get credit again. There are some lenders which specialise in lending to people with defaults and other problems in their credit history, but they charge higher rates of interest so will be more expensive. 

You may be more likely to get approved for credit once the defaults are a couple of years old and lenders can see you haven’t had any further difficulties. 

Whilst you are in a debt solution we would not recommend any form of borrowing. 

Paying a default won’t improve your credit score so you might wonder if it’s worth paying it when it will stay on your credit file regardless. But, if you choose not to pay the debt, you run the risk of the creditor applying for a County Court Judgement (CCJ). A CCJ is regarded as being worse than a default and would show on your credit file for another 6 years from the date it’s added.

Also, whilst paying down the debt won’t directly impact your credit score, lenders may see it as less of a problem and take it into consideration when deciding whether to lend to you.