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How will a default affect your credit history?
If you’re struggling with debt and you’ve missed a few repayments, your creditor may send you a default notice. They do this to formally record that you’ve not been sticking to the terms of your original credit agreement by making your payments in full and on time – and to ask for repayment. You normally have to miss three to six payments before your creditor will issue a default, although exactly when you’ll get one will vary from creditor to creditor.
They may also try other ways to reclaim the debt, such as passing it to a debt collector or taking court action. Creditors will usually default your account before they start any legal action.
But what happens if you never got a default notice because it went to the wrong address? Does the default still stand? Let’s take a look at how to deal with this situation.
Return to sender
Creditors will send the default notice to whichever address they have on file for you. If you move house, it’s your responsibility to tell your creditors about this. If you don’t let them know your new address, they could see this as you trying to avoid your debts.
When you’re contacting a creditor to tell them you’ve moved house, it’s up to you to make sure they get the message. Don’t just call them to tell them and assume they’ll update your records. When you speak to your creditors, ask if they can send you a letter to confirm they’ve got your new address. That way, if there are any problems in the future, you’ll have proof that you let them know you moved.
What can you do?
Unfortunately, it’s unlikely your creditor will cancel the default just because they sent it to the wrong address – unless it is clearly their fault as you’ve told them your new address and they’ve acknowledged that.
As soon as you realise the default notice went to the wrong address, get in touch with your creditor. Explain the problem and let your creditor know if you already told them about a change of address.
If you can afford to pay the debt off in full now, offer to do so. But if you can’t, tell the creditor and let them know how much you can afford to pay. You’ll still have any late or missed payment charges to cover, but in some cases the creditor will stop interest and charges from building up any further, or put an affordable payment plan in place to ease the financial strain. The default will still show on your credit history for six years after your creditor issues the default notice and this will mean that you find it more difficult or more expensive to borrow in the future.
Staying on top of it
One way of keeping an eye on what’s happening across all your creditors is to check your credit history on a regular basis. By doing so you’ll see any developing problems – for example, if one your accounts is showing missed payments, when you know that you’ve paid them on time. It will also show any defaults – so you’ll know if one has been registered without you getting the notification.
Not sure what the difference between credit history and credit report is? Check out our blog for more on the different credit terms.
You can check your credit history with the three credit reference agencies – Experian, Equifax and Callcredit. Your credit history with Callcredit is always free through Noddle and you can get a 30-day free trial of Experian and Equifax. After this time, you’ll either have to pay a fee for the services or cancel if you don’t want them anymore. You can also access your Equifax credit history for free through ClearScore.
If you get a default notice for one of your debts, this is a sign you’re struggling with your finances. Don’t worry, you don’t have to deal with this alone – there is help available. You can speak to one of our debt advisors if you’re looking to find out what options might be available for you. And if it turns out a debt solution is the best option for you, we’ll deal with all contact with your lenders. Just use any of the options on the left to get in touch.
You can also get free and impartial support from the Money Advice Service.
by Christine WalshBack to blog home