Defaults and Mortgages: How to Remove Defaults From Your Credit Report

Seeing a default on your credit report for the first time can feel extremely distressing. You may be worried and ask yourself the question: “can I get a mortgage with a default?”. The good news is that getting a mortgage with defaults on your credit record is often possible – it just depends on your circumstances, the age and size of the default, and the lender’s criteria.

Whether your mortgage application will be accepted by the lender depends on your individual circumstances. The lender’s underwriters will review how old the default is and whether it has been satisfied. For example, lenders may take a more lenient view on a mortgage with defaults over 2 years old on your credit file, compared to more recent credit entries.

If you are considering applying for a mortgage with a default on your credit report, this guide is for you. We will explain what a default really means for your chances of getting a mortgage, what your options might be, and your next steps.

Let’s jump in.

What is a Default on a Credit Report?

A default is a formal record that is added to your credit file when you have failed to keep up with the agreed repayments on a financial commitment. Defaults can occur with credit cards, loans, overdrafts, mobile phone contracts, or even utility bills.

Before a default is registered on your file, you would usually have missed a number of consecutive payments. It’s likely that you would have also received warning letters from the lender. If the account remains unpaid, the lender can issue an official default notice and change the status of the account to “in default” with credit reference agencies. The three most common credit reference agencies used in the UK are: Experian, Equifax and TransUnion.

When people refer to a mortgage with a default on the credit report or a mortgage with defaults on the credit file, they are normally referring to the process of applying for a mortgage while this adverse credit is visible. Adverse credit, also known as “bad credit” refers to negative marks on your credit file following mismanagement of credit commitments. Adverse credit includes defaults, late payments, county court judgements, bankruptcies, individual voluntary arrangements (IVAs) and debt relief orders (DROs).

The question “what are mortgage defaults?” can often cause confusion. Mortgage defaults may refer to defaults on financial commitments when applying for a mortgage, or defaulting on the mortgage payments themselves. The latter is, naturally, treated more seriously by mortgage lenders as they do not want you to default on your mortgage repayments to them.

How Can I Remove a Default From My Credit Report in the UK?

After being shocked by the default notification, many people search for “how to remove a default from my credit report” or “how to get a default removed from my credit report”, but it’s important for us to understand your situation first. Removing a default may or may not be possible depending on the circumstances around it.

In the UK, a default can only be removed if it has been recorded incorrectly or unfairly. If the default is accurate and the lender has followed due process, it will typically remain on your credit file for six years from the default date.

If you believe the entry is wrong, here are the next practice steps to take:

• Check your credit reports with the three major UK credit reference agencies (Experian, Equifax, and TransUnion) – CheckMyFile shows data from all three in one report.
• Contact the lender in writing, explaining why you believe the default is incorrect – you will normally need to provide evidence to support your claim.
• If unresolved, you can raise a formal complaint with the lender.
• If you are unhappy with the lender’s response, you can submit an official complaint to the Financial Ombudsman Service.

When looking into how to get a default removed from your credit file, remember that legitimate defaults are rarely deleted. Although, once they are marked as “satisfied” following repayment, lenders are likely to view your credit report more favourably.

How Do I Check if I Have a Default on My Credit File?

If you are unsure whether a default has been recorded, you should review your credit data from the three main UK credit reference agencies. These are: Experian, Equifax, and TransUnion. You may be wondering why you need to check with three different credit agencies when your credit position should be the same. This is because each agency may hold slightly different information, and update the data at different times, so it’s worth checking all of them.

A default will usually appear in the account history section. You can see the status of your payments to each creditor. If a payment status is marked as “default”, it should break down the time of default, default status (satisfied or unsatisfied) and the defaulted sum owed. The date that the account defaulted will normally be the most important to you, as the defaulted status should be removed six years from this date.

Most people who check their credit report do so because they are considering applying for a mortgage with defaults on their credit file. They are often worried about a default on their credit file for the mortgage they hope to apply for. If you review your file early, well before you plan to apply for a mortgage, you can assess your financial position and consult an expert broker to see how lenders are likely to view it.

Mortgage brokers, like Boon Brokers, regularly deal with clients who have defaults on their credit files. This means that we can assess your credit report and explain which lenders may consider your circumstances.

Can I Dispute an Incorrect Default in the UK?

Yes, you can dispute a default if you believe it has been recorded inaccurately. For example, if you believe you have an incorrectly listed default on your credit file because the account was settled prior to the default registration, you should be able to challenge it.

You should start by contacting the lender in writing and clearly explain why you believe the entry on your report is incorrect. Always supply supporting evidence from the first contact with them. Going back to our example, if you have a settlement letter proving that the account was closed and should not have defaulted, send them the settlement document. As the lender is regulated by the Financial Conduct Authority, they must investigate and respond within the FCA’s complaint timeframes.

If the default remains on your credit file, and you are unsatisfied with the response from the lender, you can escalate your complaint to the Financial Ombudsman.

In some cases, you should consider adding a notice of correction credit report entry. A credit report notice of correction allows you to attach a short statement (up to 200 words) explaining the circumstances behind the default. Lenders must read this statement before they make a decision on your appeal. However, it does not guarantee approval and may be a slow process.

The bottom line is that if you can prove that the default is inaccurate, the lender should amend or remove it. If they refuse, you should submit a complaint if you believe the default has caused you financial loss.

What Happens if the Default on My Credit Report is Correct?

If the default has been recorded accurately by the lender, it will not be removed before the six-year period expires. In this situation, you should shift your focus away from trying to remove the default as your efforts are likely to be wasted. Instead, you should consult with an expert mortgage broker to identify which mortgage lender is likely to accept your credit report as it is.

You will need to accept that your mortgage options may be limited to products from adverse specialist lenders. Since bad credit mortgage lenders take more of a risk when lending to you compared to other borrowers who have not defaulted on their commitments, you should expect a higher interest rate.

Several factors will influence how your default is viewed by mortgage underwriters:

How Long Does a Default Stay on My Credit Report in the UK?

In the UK, a default will usually remain on your credit file for six years from the default registration date. This applies regardless of whether it has been satisfied.

If you have noticed a default on your credit report, it’s common to ask the question: “how long does a default stay on your credit record?” – especially if you’re planning to submit a mortgage application in the near future. For mortgage lending, most criteria focus on the date that the default was registered. For example, some lenders may have criteria stating that if the default was registered over four years ago, they may treat it more leniently.

If you satisfy a default during the six year window, its status on your credit file will change from “Unsatisfied” to “Satisfied”, but lenders can still view the default.

After six years has passed from the registration date, the default record should automatically be removed from your file – regardless of whether it is satisfied or not. It’s important to understand that even though an unsatisfied credit default may be removed from your credit report, the debt may still legally exist and the creditor may still pursue payment.

How Can I Rebuild My Credit Score After a Default?

Rebuilding your credit score after receiving a default takes time. Fortunately, each month that goes by following a default registration can improve your credit score as long as you don’t receive further adverse credit.

If you’re wondering how long it takes to rebuild your credit score after a default, the honest answer is that it varies. There are many factors at play that will impact how long it takes for your credit file to recover. If you are hoping to apply for a mortgage, lenders will look closely at how you have managed your finances since the default was registered.

To improve your chances of getting a mortgage, you can take the following practical steps:

• Registering your current address on the electoral roll
• Paying all bills and credit commitments on time
• Keeping credit card balances below their limits
• Avoiding multiple credit applications at one time

Some people consider using a credit-builder card when researching how to rebuild credit after a credit card default. If you use these cards carefully and repay them in full each month, it demonstrates responsible borrowing to lenders. This may improve your credit score over time.

If you’re researching “how long after a default can I get a mortgage?”, lenders will assess the age of the default, whether it’s satisfied, and your recent credit behaviour. You should consult with a whole-of-market broker, like Boon Brokers, who regularly helps clients with defaults on their credit files.

Get a Mortgage Broker to Help You

Applying for a mortgage when you have previous credit issues can be worrying. Mortgage criteria differ significantly between lenders, so you should think twice before applying for a mortgage from your own research. Understanding which banks or specialist providers may consider your credit file is not always straightforward – there are many factors to consider.

For that reason, you should consider consulting with a whole-of-market mortgage broker to assist with your application. A mortgage broker can discuss your financial situation fully, with no judgement of the circumstances that surround your credit issues. They can then source the market to identify your most suitable deal, present you with the proposal, and then submit your application. Mortgage brokers are often assisting you right until your mortgage is offered by the lender. Importantly, a mortgage broker cannot guarantee that your application will be approved, but they can use their expertise to maximise your chance of success.

At Boon Brokers, we provide a fee-free, whole-of-market broker service, which compares options from over 90 lenders across the UK. If you are unsure how to proceed with your credit file, contact one of our brokers today to start your mortgage journey.

It’s important to remember that your home may be repossessed if you do not keep up repayments on your mortgage.