How will a default affect my credit file?
A default will appear on your credit file for six years, even if you pay off the debt in full.
Any creditor who checks your credit file in this time will see the default. They'll take this into account if you apply for other credit.
After six years, the defaulted debt will be removed from your credit file, even if you haven’t finished paying it off.
This means it’ll be harder to get cards, loans or bank accounts because the default tells the creditor there’s a greater risk of you not paying. You'll also find other types of credit such as mortgages and even mobile phone contracts may be harder to get.
Some creditors will refuse your application when they see the default on your credit file. Others will give you credit but they'll charge you a higher rate of interest. It won’t be impossible to get credit, but you’ll have less choice and it’ll cost you more.
Some jobs in the financial services sector may be affected if an account defaults. This is not common. This is a risk if your current employer regularly credit checks you, or if you’re applying for a new job that requires a credit check. Please call us for further advice if you think this might affect you.
It's important to remember that a default doesn't last forever. You'll find creditors are less interested in the default as time passes, and eventually it’ll disappear from your credit file.
I'm on a DMP or TPP and I've received a default notice. Do I need to do anything?
It’s normal to receive default notices if you’re on a debt management plan or token payment plan. All this means is that you've been paying less than the agreed minimum monthly payment to your debts. Just continue with your plan payments as normal.
If a debt is passed to a collection agency, they'll get in touch with you to let you know that they're now looking after the debt. Should this happen, tell them that you're on a DMP or TPP. Let your DMP or TPP provider know the debt's now being looked after by a collection agency, and they'll make sure that your monthly plan payment is distributed correctly.
Should you get a ‘letter of claim’ from your creditor, or any paperwork from the county court after receiving a default notice, please let your DMP or TPP provider know. They'll be able to talk you through what to do next.