Finding out you have a default on your credit history can feel like a real setback, especially if you're hoping to buy a home or apply for a mortgage.
You might be wondering whether it's possible to remove it, how long it will affect you and whether your dream of owning a home is now on hold.
The good news is that a default doesn't necessarily mean you can't get a mortgage. In fact, many people with previous credit issues go on to buy a home successfully.
Let's look at what a default actually is, whether it can be removed and what steps you can take to improve your chances of getting a mortgage.
What Is a Default?
A default is recorded when you've failed to keep up with repayments on a credit agreement and the lender decides that you've broken the terms of your contract.
This could relate to:
- Credit cards
- Personal loans
- Store cards
- Mobile phone contracts
- Utility bills
- Finance agreements
Before registering a default, lenders will usually contact you several times about the missed payments.
Once the default has been registered, it becomes part of your credit history.
How Long Does a Default Stay on Your Credit History?
One of the questions we're asked most often is:
"How long does a default stay on my credit file?"
In most cases, a default remains on your credit report for six years from the date it was registered.
This applies whether you've since paid the debt or not.
If you've settled the debt, your credit report will usually show the default as 'Satisfied', which can be viewed more positively by lenders than an outstanding default.
After six years, the default will normally disappear from your credit file automatically.
Can You Remove a Default from Your Credit History?
The answer depends on why it's there.
If the Default Is Correct
If the lender has recorded the default accurately, you usually can't have it removed early simply because it's affecting your credit score.
Instead, the focus should be on improving the rest of your credit profile while you wait for it to expire.
If the Default Is Incorrect
Mistakes do happen.
If you believe the default shouldn't be there because:
- It wasn't your debt
- The information is inaccurate
- The lender failed to follow the correct process
- The account was affected by fraud or identity theft
You have the right to challenge it.
Start by contacting the lender and asking them to investigate.
If they agree the information is incorrect, they can update or remove the default from your credit report.
Does Paying the Default Remove It?
Not immediately.
Paying the debt is always a positive step, but it doesn't erase the default itself.
Instead, your credit report will usually show that the account has been settled.
While the record remains for six years, many mortgage lenders view a satisfied default more favourably than one that's still outstanding.
Can You Get a Mortgage with a Default?
Yes, it's often possible.
Every lender has different lending criteria.
Some lenders may decline applications involving recent defaults, while others specialise in helping people who've experienced financial difficulties in the past.
They'll usually consider factors such as:
- How old the default is
- How much money was involved
- Whether it's been paid
- Your current income
- Your deposit size
- Your recent credit behaviour
A single small default from several years ago is generally viewed very differently from multiple recent defaults.
How Can You Improve Your Credit History?
While waiting for a default to disappear, there are several ways to strengthen the rest of your credit profile.
Register on the Electoral Roll
Being registered to vote helps lenders confirm your identity and address.
It's a simple step that can have a positive impact on your credit profile.
Make Every Payment on Time
Your recent payment history matters.
Setting up Direct Debits can help ensure you never accidentally miss a payment.
Reduce Existing Debt
If possible, try to lower outstanding balances on credit cards and loans.
Lenders generally like to see that you're managing your borrowing responsibly.
Avoid Multiple Credit Applications
Applying for lots of credit within a short period can make lenders nervous.
Only apply when you genuinely need to.
Check Your Credit Report Regularly
It's worth reviewing your credit report every so often to make sure everything is accurate.
Look out for:
- Incorrect addresses
- Duplicate accounts
- Old balances that should show as settled
- Accounts that don't belong to you
Correcting errors can sometimes improve your credit profile surprisingly quickly.
Should I Use a Credit Repair Company?
You may have seen companies promising to "repair" your credit score or remove defaults for a fee.
Be cautious.
No legitimate company can simply remove accurate information from your credit history.
If a default has been recorded correctly, the same rules apply whether you contact the lender yourself or pay someone else to do it.
In many cases, you can achieve the same results without paying expensive fees.
Why Specialist Mortgage Advice Can Help
If you've had credit problems in the past, it's worth speaking to a mortgage advisor before making an application.
Submitting applications to lenders that aren't likely to accept your circumstances can result in unnecessary credit searches.
Instead, an experienced mortgage advisor can help identify lenders whose criteria are better suited to your situation.
That can save both time and disappointment.
Final Thoughts
Having a default on your credit history doesn't mean your homeownership plans are over.
While correctly recorded defaults usually remain on your credit file for six years, there are plenty of things you can do to strengthen your financial position in the meantime.
Pay debts where possible, maintain a good payment history, avoid unnecessary borrowing and seek professional mortgage advice before applying.
At HLC Mortgages, we help many clients who thought their credit history would stop them getting a mortgage.
Every situation is different, and there are often more options available than people expect.
If you're unsure where you stand, we're always happy to have a friendly conversation and help you understand what's possible.
Contact us today!
Think carefully before securing your debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.