Created by: Rebecca Goodman | 3 October 2019

Can I apply for credit if there's a default notice on my credit history?

If you’re struggling to pay off debt, you may have been issued a default notice by a lender. These appear on your credit file and usually happen if you’ve been unable to make your repayments or you’re making them late on a regular basis. Here we look at what you can do if you have a default and what kind of credit you might be able to apply for with one.

What is a default notice?

If you have missed a number of repayments, or paid less than the amount required for between three and six month you may received a default letter from your lender.

This can be on any kind of loan, such as a credit card, personal loan or hire purchase agreement.

The notice is sent to show you’ve broken the terms of the loan and it is marked on your credit history, where it will stay for six years.

Before the default is marked you will be sent a warning telling you what has happened and you are usually given a period in which to make up any missed payments to avoid the default and if you’re able to do this the account will go back to normal.

Once the default is market on your credit history, the lender may then take action to collect the debt.  

Can other lenders see the default?

If the default is on your credit history, this remains for six years even if you’ve paid the debt off in full and this is visible to other lenders.

This can make it harder to apply for credit in the future, as lenders will be able to see you’ve broken the conditions on a previous loan.

Is it possible to apply for credit with a default?

You may still be able to apply for credit if you have a default on your card, although the interest rate could be more expensive.
Six years is a long time for a default to remain on your credit score and in this time you may have cleared the debt and be well and truly back in the black.

However, as lenders can still see it, this means if you are approved for new credit the interest rate may be at a higher rate.

The more time has passed since the default is applied, the less it will impact the rate on a new credit amount.

However, it’s always worth shopping around to see what products are on offer to make sure you’re not taking on an unaffordable new debt.

There are also a number of products on the market designed to help those with poor credit scores so this could be another option for you.

How can a default be removed?

If you think you’ve been given a default by accident, the first thing to do is contact the lender and ask why it’s been applied.

It might be the case that it has been issued in error and in which case you can ask for it to be removed from your credit history.

Where can I get help with debt?

There are a number of free, independent, organisations available to help if you’re struggling to pay off debt. These include StepChange, Citizens Advice and The National Debt Helpline.

These services are free and will be able to look over your finances and create manageable debt repayment plans. They can also help you if you’re being contacted by debt collectors.

There are also a number of services promising to help those in debt for a fee. These are to be avoided at all costs as you should never have to pay for this kind of help or advice. 
 

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