whats a default

flybynight

i was looking at a loan application and it said have you had any defaults in teh last year?
then it said have you missed/ been late with any payments in the last year?
whats the difference?

the*dark*one

When you miss or make late payments on any credit accounts you have i.e. credit cards or even catalogue accounts etc, it gets logged on your credit reference file as to how late you were in paying. It gets marked from 1-3, 1 being 1 month late etc. A default is failure to meet the terms of a credit agreement. When you have defaulted the credit agreement i.e. you haven’t made any payment for a number of months and the creditor in question sends you default notices and your credit reference file will usually state the date your account went into default and this will stay on your credit reference file for 6 years regardless of whether you later pay off the debt or come to an agreement with the creditor and agree a lump sum and pay this and then your balance will be satisfied. Defaults on your account can affect your ability to gain further credit such as cards, opening bank accounts and mortgages etc.

flybynight

oh dear, i have been filling out forms wrong for the past 6 years, i thought they were the same thing.

the*dark*one

If you have missed a payment the reason they get logged is so that other creditors can what your repayment history is like eg as to whether you are struggling every month to meet repayments or whether you pay off your creditors monthly with no late payments. Even if you make 1 late payment out of a whole year it shouldn’t affect you that badly, after 12 months the slate is wiped clean and starts again from 0. If you haven’t already, get a copy of your credit reference files from Experian and Equifax to see what your credit history is like.

the*dark*one

I just checked my credit reference file online and this is what it states:

file_wizzard

the*dark*one wrote:

If you have missed a payment the reason they get logged is so that other creditors can what your repayment history is like eg as to whether you are struggling every month to meet repayments or whether you pay off your creditors monthly with no late payments. Even if you make 1 late payment out of a whole year it shouldn’t affect you that badly, after 12 months the slate is wiped clean and starts again from 0. If you haven’t already, get a copy of your credit reference files from Experian and Equifax to see what your credit history is like.

Just to clarify, late payment mark stay "visible" on your credit file for up 6 years, especially if the account is settled or close very soon after the entry was made, HOWEVER most lenders systems are set to only take about of the last 3 years or less of payment history depending on how strict they are with the scoring for a specific product.

i.e for a mortgage it may well be the full 6 years, for a sub prime credit card / loan it will only be 12 months

with regards to a "Default" a true default is the LEGAL termination of the contract by either party as the conditions of the contract have not been upheld by either party, reasonable notice and time to resolve must be given, in most cases lender will allow 3-6 month before a full default is issued

flybynight

cheers guys, i had missed the odd payment, before i put em all on dierct debit( since i did this 6 mnths ago there have been none missed) but i have never had it cancelled, so i havent had a default right?

file_wizzard

flybynight wrote:

cheers guys, i had missed the odd payment, before i put em all on dierct debit( since i did this 6 mnths ago there have been none missed) but i have never had it cancelled, so i havent had a default right?

Right ;O). best to check all of your credit files though