If you have a default on your credit report, you might find it’s a bit harder to borrow money. However, there are ways you can lessen the negative impact. To help improve your chances of accessing credit, here are a few tricks that can help your credit report bounce back.
What is a default on a credit report?
A default is marked on your credit file when a lender closes one of your accounts due to missed payments. For instance, say you haven’t been able to keep up with your household bills for around 3-6 months.*
Accordingly, a utility or mobile phone provider might decide to close your account and stop you accessing their service.
How long does a default last for?
A default stays on your credit file for 6 years. It will remain there even if you clear your debt, so it’s important to try to avoid getting one altogether. If you do have a default on your credit report, it can make it trickier for you to borrow money. This could be in the form of higher rates than you were expecting, or simply not receiving any credit offers at all when looking for a loan, credit card or mortgage.
Can I get someone to remove a default?
You can only get a default removed from your credit report if you can prove that it was an error. Get in touch with the credit referencing agency and explain the situation. The credit referencing agency should then get in contact with the lender to check the accuracy of your claim. They’ll add a ‘Notice of Correction’ in the meantime to signal to other lenders that the default may be a mistake.
If the lender realises the default is an error, they will update your credit file. If they don’t agree however, the default will remain on your credit file.
Can I reduce the impact of a default?
Although the default will remain on your credit file for six years, there are a few things you can do to slightly lessen the impact.
- Pay off what you owe – although this won’t remove the default from your file, once the debt is paid off, they mark it as ‘satisfied’. Although it doesn’t completely negate the negative impact, it will look better to lenders.
- Offer an explanation – it is possible to get in touch with a credit referencing agency & ask them to add a note explaining the circumstances around your default. For instance if you experience a redundancy.
- Wait it out – if you get your finances back on track, the negative impact of the default will reduce over time. So, after a few years, you may find you have more credit options again.
Can I rebuild my score in other ways?
Yes, concentrating on other ways you can improve your credit score could improve your access to credit. A few quick tricks include:
- Register to vote – being on the electoral roll helps lenders verify your address and makes you appear more reliable.
- Keep your credit utilisation low – say that you already have a credit card. Only spending 30% of your available credit limit each month can improve your credit score. However, this is only true if you’re making at least the minimum monthly repayment. More missed payments could make your credit report worse, so only borrow what you can afford to pay back.
- Get a credit builder card – suppose you don’t already have a credit card and you think you’re back on track with your finances. You could check if you’re eligible for a credit builder card. These cards are often available to those with less than perfect credit histories. Use it for a few small purchases and pay it off in full each month: as a result, you can rebuild your credit score over time.
- Clear any outstanding debt – it’s not always easy to clear your outstanding debt, but clearing down as much as you can each month, even a small amount is recorded each month and counts against your score
Want to see how your eligibility for credit is shaping up? You can quickly check your options with over 50 UK lenders with Aro, without impacting your credit score.