How long do defaults stay on your credit report?

Whenever you take out credit, it’s important to stay on top of any repayments agreed between yourself and the lender. If you fall behind, you may face a default. But what is a default? How long do defaults stay on your credit report? And how can they impact your financial future?

Our guide will walk you through everything you need to know, outlining exactly how defaults are acquired, how long they last and how they might affect your score. We’ll also dive into our top tips on how to manage defaults if they do occur.

What is a default?

A default occurs when you fail to make scheduled repayments on credit accounts such as loans, credit cards, and bills for an extended period of time (usually 90 days). You’ll typically receive a notice, then if you fail to make the payment, your account will default.

If you’re struggling to make your repayments, it’s always best to communicate with the lender. In some cases, you may be able to come to an agreement such as a partial repayment plan. However, if a default remains unpaid, the lender may pass your account to a collection agency or consider applying for a County Court Judgement (CCJ).

How does a default affect your credit report?

Unfortunately, having a default on your credit report can significantly damage your credit score. It will be shared with credit reference agencies (CRAs) like Experian, Equifax, and TransUnion, making it visible to future lenders during their checks.

This visible default signals that you’ve struggled to meet a debt obligation in the past, causing your creditworthiness to suffer in the eyes of lenders.

A lower credit score can impact your borrowing power, making it harder for you to secure loans, credit cards, and mortgages. This is why it’s especially important to make payments on time to protect your long-term financial health.

How long does a default stay on your credit file?

A default will stay on your credit file for six years from the date that it was registered. During this time, it will be visible to any lenders, therefore negatively impacting your chances of approval. If you are accepted, you’ll usually be offered lower credit amounts and higher interest rates to offset the perceived risk. Mortgage lenders are especially cautious when lending to those with a history of defaults. If they do accept, you might get an offer with higher interest rates and need a larger deposit.

Once the six-year period is up, the default should be automatically removed from your account. But if you’re wondering how to get a default removed after six years if it’s still showing, you may have to request to remove it manually.

Can a default be removed?

Defaults remain on your credit report until the six-year period is up, and they can only be removed if you can prove that there has been an error. In this case, you’ll need to contact the credit reference agency and make them aware of the issue immediately. The agency will add a ‘Notice of Correction’ to your report, then contact the lender who will check the accuracy of your claim.

While a genuine default cannot be removed for six years, there are steps you can take to lessen its impact in the long run. Your first port of call should be settling the debt as soon as possible, so that it can be marked as ‘satisfied’ on your report. While it will still be visible, you’ll be able to demonstrate that you’ve taken the necessary steps to resolve it.

In some cases, you may also be able to add an explanatory note to the account (for instance, if you were temporarily unwell or made redundant at the time of the default).

Top tips for boosting & protecting your credit score

While defaults are visible for six years, you can lessen their impact over time – especially if you implement healthy habits and commit to responsible financial management. Achieving a good credit score won’t happen overnight, but there are various ways to help boost it gradually:

• Make all future payments on time: It’s crucial to prioritise paying bills and loans on time, as additional late payments can land you in further trouble. Set up reminders or automatic payments to ensure you never miss a deadline.

• Limit credit applications: Applying for multiple forms of credit in a short space of time can make you appear high risk to lenders. Space out your applications and only apply for credit that you’re confident you’ll be approved for.

• Keep credit utilisation low: The lower your credit utilisation, the more appealing you’ll look to lenders. So, if you already have a credit card, try to spend no more than 30% of the available limit.

• Regularly monitor your report: This is especially important when it comes to identifying inaccuracies or fraudulent activity. If you notice anything suspicious, you can dispute it as soon as possible and avoid additional damage to your score.

The bottom line…

Defaulting can have major consequences, damaging your credit score and making it more difficult for you to secure credit in the future. So, implementing effective monthly budgeting and setting up automatic payments is key to help you stay on top of repayments.

And remember, bad credit scores don’t have to be permanent! There are various ways to rebuild yours if it’s taken a hit.

Moneyboat is here to help

If your credit score is looking less-than-ideal but you need temporary funds to tide you over, here at Moneyboat, we may be able to help. In the case of covering unexpected emergencies, we can offer fair and flexible short-term loans, ranging from £200 to £1,500.

Our eligibility process ensures applicants are a good fit for the product and that they’ll be able to comfortably make the repayments.

If it’s additional insights you’re after, just head over to the Moneyboat blog. And if you’re worried about money or looking for advice, you can always contact National Debtline or StepChange for free support.