How long do defaults stay on a credit file?

A default is a marker on a credit file that shows someone didn’t keep up with the payments they agreed to make to a lender. 

For example, if someone doesn’t pay the instalments on a loan, or if they don’t make the monthly payment stated on a mobile phone contract for an extended period of time, it will eventually be recorded as a default. 

Defaults are serious negative payment markers and they can make it harder to borrow money. But you should get several warnings before a default is applied to your credit file and it’s important to know that they don’t stay on your credit report forever. 

Here, we look at how long defaults stay on a credit file and the consequences they can have.

What is a default? 

A default is a type of negative payment marker on a credit report, which is applied because of recurring missed payments. 

Defaults are connected to certain types of debt that are regulated by the Consumer Credit Act, including: 

• Credit cards and store cards 

• Personal loans 

• Payday loans 

• Hire purchase 

• Catalogue debt 

• Contracts, such as mobile phone contracts. 

A default means that a lender reported the unpaid debt to a credit reference agency. Put simply, getting a default means the lender no longer views you as a customer behind on your payments, but as a person who owes them money.  

When can a default be listed on my credit report?

Defaults don’t come out of the blue. They’re part of a sequence of notifications from a lender that starts with account statements and payment reminders – often for three to six months before the official default notice. But it’s also important to note that the number of payments you can miss before you get a default is entirely down to the lender you use. 

As well as payment reminders in the months before a default, lenders have to send a “default notice” in writing before the default is officially recorded. This letter states their intention to report the default, including details of how much is owed, who they owe it to, and how it can be repaid. 

Most importantly, the letter gives a deadline. If you can repay the debt within 14 days of the default date, the default won’t be recorded on your credit file. Another option is to arrange a payment plan, however some lenders won’t accept anything other than full repayment at this stage. An arrangement to pay can also be reported as a negative marker on your credit report until the full debt has been repaid. 

If you receive a notice of default and you want to discuss your options, it’s always best to get in touch with the lender directly.

How long does a default stay on your credit file? 

Credit reports contain the last six years of your credit history. This means that, like CCJs (County Court Judgments) and bankruptcies, a default will stay on your credit file for six years. 

During this time, you’ll be expected to pay off what you owe. When you’ve paid off the amount in full, the default will still appear on your credit report, however it will be noted as “satisfied”, which lenders will see as an improvement. You can also take steps to build a positive payment history in spite of having a default on your record by positively maintaining your other credit agreements. If the default was added correctly, you can’t remove it before the six-year period ends. 

How does a default affect your credit file? 

Your credit file is a record of your financial history according to the information held by the three main credit reference agencies in the UK – Experian, Equifax and TransUnion. It includes personal information from public records (like the Electoral Roll) as well as information supplied by lenders. These records are used to calculate your credit score. 

When you apply for new forms of credit, new bank accounts, or new contracts, lenders check your credit report to gauge how risky it would be to take you on as a customer — and a default can have a serious negative effect on your credit file and overall credit score. 

Defaults are visible to lenders, and they can take it as a sign that you haven’t handled debts responsibly in the past. Your application can represent a higher risk, and this can make it harder to find, for example, a mortgage lender who agrees to take you on as a customer. It can also leave you with fewer options for new financial products, even once the default is satisfied.

That’s why it’s essential to respond to a default notice letter ASAP. If you can pay off the debt within 14 days or arrange a payment plan, you can avoid the default being recorded on your credit record in the first place. 

Consequences of a default

Having a default makes it more challenging to get credit during the six years it appears on your credit file, especially when the default is recent. Specifically, a default can mean that:

• Lenders may only agree to lend you part of what you ask for. For example, if you apply for a car loan, they might only be willing to let you borrow up to a certain amount, rather than the total you’ve requested.

• Lenders probably won’t sign you up for their most competitively priced product. For example, they may charge you higher interest rates on the money you borrow.

• Lenders may not lend to you at all. They might reject your application for a loan, mortgage, bank account, or credit card altogether.

It’s also important to understand that you still owe money to the creditor after defaulting, so there can be further negative consequences. 

If you don’t repay or keep up the agreed payment schedule, the creditor can take legal action (by applying for a CCJ), or they can work with a debt collector or debt collection agency. 

When you get the formal letter, it should include details about the steps the lender will take if you don’t settle the defaulted debt. Remember, a CCJ is also part of the public record, so it will be visible when, for example, landlords do a “soft search” before setting up a rental contract. 

Steps worth taking if you have a default on your credit report

After six years, the default will be removed from your report automatically. Even if you didn’t settle the debt, the lender can’t re-add it. As long as you’ve maintained monthly payments on other credit, you haven’t been issued another default, and you haven’t had other negative payment markers added to your file, it should become easier to get new credit. 

There are also some steps you can take while you’re waiting that might help improve your credit score. 

Start by finding out if you still have a default. 

The best way to check the details of your credit report is with Checkmyfile, the most detailed credit report you can get. When you use Checkmyfile, you compare the complete information that Experian, Equifax, and TransUnion hold on you. You can see when the default was recorded, whether it has been satisfied, and check if your payments have been recorded correctly. 

Then, you might be able to move on to these steps. 

1. Ensure the default has been reported correctly

There is no way to have a correct default taken off your credit report. However, there are some situations where defaults are recorded by mistake. If this is the case, you might be able to have the default removed. 

This include situations where: 

• You have bank statements that show you made the payments on time

• The default was issued to you in error, for example, because it was meant for another customer with the same name

• The default notice was issued when you’d only been in arrears for a short time, for example, you were less than three months behind on your payments when you were given the default notice.

In these circumstances, you may be able to dispute the default with the lender who reported it. If you can show that a debt shouldn’t have been marked as defaulted, you might be able to have it removed from your report before the end of the six years.  

2. Pay off what you owe to satisfy the default

When you repay the debt you defaulted on, the default will be shown as satisfied. Although it will continue to appear on your credit file for six years, a satisfied default can have less of a negative impact on your credit score than an unsatisfied one. This will also help you avoid court action and further negative markers on your report. 

3. Take steps to improve your credit report 

Even while you have a default on your credit file, there are some steps that can help improve your credit score and offset some of the negative impact of your default. 

• Keep your Electoral Roll information up to date. This is especially important if you move house or legally change your name. If your name isn’t on the Electoral Roll yet, you can register to vote online. 

• Keep up the regular repayments on the remaining default debt, as well as any other debts you have. 

• Only apply for credit you need. Checkmyfile recommends limiting applications for new credit cards or loans to 10–12 per year, or roughly one per month. 

Improving your credit report takes time, but these steps can make a difference, especially as more time passes from the default date. 

In summary: How long do defaults stay on a credit file? 

When you receive a default notice, you have 14 days to settle the debt or agree to a debt repayment plan with your lender. If you can do this successfully, the default won’t be recorded on your credit file at all. 

Once they are recorded, though, defaults stay on your credit file for six years. During this time, they can have a negative impact on your chances of getting new credit. Although this can improve as the six-year period goes on, lenders can still see the default when they search on your credit record, even if you pay off the debt in full. 

Even with a default on your credit report, there are steps you can take to start building a positive payment history. Start by checking your credit record with Checkmyfile, the most detailed credit report you can get.