How Long Do Defaults Stay On Credit File? (UK Guide)

Defaults can have a pretty significant role in both your financial and personal life, so understand how long they last and how to manage them.

Updated: November 24, 2023
Matt Crabtree

Written By

Matt Crabtree

 

Generally speaking, it might help if you try to think of your credit report like it's some kind of a financial diary, as that's essentially what it is — a fairly detailed record of all of your borrowing behaviour and how well you're actually able to manage a credit account once you're in possession of one.

Now, obviously, your credit report plays a massive role in determining your overall credit rating and how able you are to borrow money in the future, but one of the main obstacles that can get in the way of this and leave a lasting mark on your credit history is what's known as a ‘default'.

Still, what exactly is a default, and how long would one even stay on your credit file? Well, throughout this article, we'll be covering all you need to know about the kinds of implications a default can have on your credit file in the UK, so keep reading to find out how bad or manageable they are in reality.

Understanding Defaults

Let's start things off by providing a little bit of background information regarding what defaults actually are and what they do:

What Is a Default?

Simply put, a ‘default' is something that happens whenever you aren't able to meet any of the terms of your credit agreement, essentially meaning that you're going to be missing your repayments.

This can actually happen with various kinds of credit accounts that you might have, too — whether it's things like a personal loan, your credit card, or even just your bank account in general.

So, if you end up in this situation where you've defaulted on the credit you've been given, whichever lender that you've gone to would typically issue a default notice to you, which will tell you about any of the missed payments and give you a chance to catch up.

How Does a Default Affect Your Credit Report?

Generally speaking, pretty much the moment that you receive this default notice, a bunch of different events get put into place that can, unfortunately, have quite long-lasting effects on your overall credit report, even if you manage to sort yourself out quickly.

This default notice then gets recorded by a credit reference agency (the people who maintain your credit history) and can be seen by literally any of the future lenders you would go to, so this can obviously have some kind of influence in their decision-making when you go to apply for credit at some point.

The Duration of Defaults on Your Credit File

With some of the fundamentals out of the way, let's get into the main theme of this article and see what kind of knock your credit rating will ultimately take:

How Long Do Defaults Stay?

Just to get some of the good news out of the way early: no, fortunately, your default isn't going to remain on your credit report indefinitely — but that doesn't mean their presence isn't still going to linger for a decent amount of your time on your credit report.

To get specific, the Consumer Credit Act says that a default would stay on your credit file for six years from the first moment that you missed a payment (that would've led to the initial default in the first place), so obviously, it's worth mentioning how crucial this fixed timeframe is for anyone who might be trying to rebuild their credit history after facing financial difficulties.

The Impact of Defaults on Your Credit Rating

Naturally, defaults tend to have a pretty severe negative impact on your overall credit rating during the six years it's there, and in terms of some of the implications of this, it'll mean that any lenders who've seen your credit rating to assess the risk of lending to you are going to see that default and assume you're probably a higher risk borrower.

Generally speaking, if it's not just higher interest rates and fewer banks that'll give you a loan, you'll find that the majority of lenders may even just reject your application outright if you try to borrow money from them in the future.

So, the main takeaway from this article would simply be to stay incredibly vigilant and aware of your responsibilities when it comes to the repayments that you have to make on whatever kind of credit you've been given.

You would obviously never want to be in a situation where no lender would ever be willing to give you a loan, especially if you're a business owner who might need this in the future.

Can a Default Be Removed From Your Credit File?

Unfortunately, once the default first gets recorded on your credit file, don't expect for it to be removed before the six-year period expires — that doesn't mean there aren't still a few steps that you can take in order to mitigate some of its impact.

If, for instance, you're somehow able to pay the defaulted debt in full, this actually means that the default gets marked as satisfied, and while, yes, the default will still be visible for anyone to see, it does, however, mean that the negative impact is lessened slightly which makes it a bit easier to borrow money in the future.

Dealing With Defaults: What You Need to Know

To wrap the article up and leave you in a proactive mindset, let's end things by seeing what positive steps you can take to recover from a default on your credit file.

Debt Collection Agencies and Defaults

As touched on a little bit earlier in the article, there's a chance that your lender decides to pass the debt on to a debt collection agency when you default on your credit, who'll then try to recover the unpaid debt from you.

Now, thankfully, the important thing to note here is that being involved with a debt collector doesn't actually extend how long the default notice is on your credit file or anything — the aforementioned six-year countdown always starts from the date you first missed a payment.

Disputing Information on Your Credit Report

If you somehow think there might be some kind of error in the information showing up on your credit report (like the fact a default has been recorded there), you do still have the right to dispute it, and the credit reference agencies are actually obligated to investigate and correct any inaccuracies if there end up being any.

As explained, the ramifications of a default notice can play a pretty significant role in your life, so ensuring that your credit report accurately reflects your financial history should be massively important to you.

The Negative Impact of Default Notices

Of course, receiving a default notice is a hugely stressful experience, but it's paramount to understand why it is significant — default notice itself doesn't actually stay on your credit file; it's the consequence of missing payments and the subsequent default that's going to affect your credit history instead.

What the default notice does, however, serve as is essentially a warning to you and an opportunity for you to address the issue before it ends up escalating.

Related Guides:

How Long Do Defaults Stay on Credit File: FAQs

Can I Explain Past Financial Difficulties to Future Lenders?

How Can I Mitigate the Impact of a Default on My Credit Rating?

What Steps Can I Take to Rebuild My Credit After Facing Defaults?

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