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Default notices, missed payments and your credit file

i The advice on this page applies to anyone with personal debts taken out in the UK.

You may get a default notice or "notice of default" if you miss or do not make agreed payments.

A default is recorded in your credit file and can affect your credit rating.

An account defaults when you break the terms of your agreement.

The people you owe money to (creditors) may cancel your contract if they think you cannot get back on track.

A debt can only default once, but afterwards creditors can take further action to collect it.

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What is a default notice?

This is a letter your creditor sends to warn that you are behind on payments and your account may default.

Creditors usually send a default notice after six months of missed or under payments.

They will give you at least two weeks to make up missed payments.

If you cannot pay in this time your account will default.

Default notices apply to debts regulated by the Consumer Credit Act.

These include:

  • Credit and store cards
  • Payday loans
  • Personal loans
  • Hire purchases

Does a default notice affect your credit rating?

A default notice does not affect your credit file, but the account defaulting does.

Your credit file will show that you did not make your agreed payments.

This will impact your credit score.

Creditors may think the default makes you high risk to not pay them back.

This makes it harder to get:

  • A new loan
  • A newcredit card
  • A new mortgage
  • Certain bank accounts

Findo out more about how debt affects your credit file.

If the debt is regulated by the Consumer Credit Act, creditors are required to send you a default notice and give you time to act.

What happens when you get a default notice?

Your creditor will ask you to pay the full amount owed instead of instalments.

You can ask to pay in affordable instalments, but your creditor may not agree.

If the account defaults, your creditor can:

If the debt is regulated by the Consumer Credit Act, your creditor cannot take any of these actions unless the account defaults.

If you are worried about missing payments and getting a default notice, we can help you.

We will look at your budget to understand your situation and give you free, personalised advice.

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How do I recognise a notice of default?

A default notice will have this message in bold at the top:

  • 'Important you should read this carefully'
  • 'Default notice served under section 87(1) Consumer Credit Act 1974'

The default notice will also tell you:

  • How much you need to pay
  • The deadline to pay – you must get at least 14 days

They will include an information sheet from the Financial Conduct Authority (PDF) recommending you get free debt help, from us or another charity.

A default notice will suggest you contact a solicitor or Trading Standards for help. You don’t need to do this.

The wording of default notices was set in a 1983 law, before free debt help from charities like us was widely available.

Defaulted accounts and your credit file

A default will appear on your credit file for six years, even if you pay off the debt in full.

This means it’ll be harder to get credit cards, loans or bank accounts.

You may also find it harder to get other types of credit such as mortgages and even mobile phone contracts.

The defaulted debt will is removed from your credit file after six years. Even if you have not finished paying it off.

Some creditors may give you credit at a higher rate of interest. Others will refuse you completely.

Defaulted accounts and your credit file

Some jobs in the financial services sector may be affected if an account defaults.

This is a risk if credit checks are part of your employment contract.

Please contact us for advice if you think this might affect you.

A default does not last forever. Creditors care less about it over time, and one day it disappears from your credit file.

Debt management plans and default notices

You will probably get default notices if you are on a debt management plan (DMP) or token payment plan (TPP).

This is because you pay less than the minimum monthly payment amounts.

Continue with your plan payments as normal.

If a debt is passed to a collection agency, they will let you know.

If this happens, tell them about your DMP or TPP and contact your plan provider. They will make sure your monthly plan payment is distributed correctly.

If you get a 'letter of claim' or any paperwork from the county court after receiving a default notice, let your DMP or TPP provider know.

They will advise you what to do next.

What should I do if I get a default notice or my account defaults?

A default is a warning sign that you cannot afford your payments.

You should make a plan and get free debt help before the people you owe money to take further action.

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