Have I defaulted?

WonkeyDonkey

I'm confused. Please help.

I have missed payments on two of my credit cards in the last 6 months (Halifax 1 month; Barclaycard 2 months). I have now paid all arrears and am making regular monthly minimum payments.

Both of the accounts are 'closed', meaning that I cannot use my cards. Does this mean that I have defaulted?

I'm sorry if this seems like a stupid question but neither Halifax nor Barclaycard have been very helpful in the information stakes, although they were helpful when they wanted the arrears. :think:

Thanks

YorkshireBoy

Technically you have 'defaulted', because the dictionary definition is a "failure to fulfill an obligation" ie you were obligated to make the minimum payments on time!

However, what I think you're asking is will your credit file show a 'default' marker? The answer to that question is almost certainly no, not until you've missed around 6-8 months of payments and they've served you a formal default notice.

Consumerist

If you have missed payments then these are likely to have been recorded on your credit file. The only way to be sure is to ask the banks which Credit Reference Agencies they use and have a look at your credit file which will cost £2 per agency. If payments were late then they too are likely to have been recorded on the file.

A default usually occurs only if the account is recorded as not settled when closed. From what you say, you have not defaulted if you are keeping up your payments but it would be sensible to check the appropriate credit files to be sure.

WonkeyDonkey

YorkshireBoy wrote: »

Technically you have 'defaulted', because the dictionary definition is a "failure to fulfill an obligation" ie you were obligated to make the minimum payments on time!

However, what I think you're asking is will your credit file show a 'default' marker? The answer to that question is almost certainly no, not until you've missed around 6-8 months of payments and they've served you a formal default notice.

Thanks, I was hoping that was the case.

As I cannot use the cards (and would rather pay them off in the long term) would it be beneficial to reduce the credit limit once I have paid off a significant amount, say £500-£1,000?

Consumerist

WonkeyDonkey wrote: »

As I cannot use the cards (and would rather pay them off in the long term) would it be beneficial to reduce the credit limit once I have paid off a significant amount, say £500-£1,000?

If the accounts are closed the credit limit is irrelevant. You cannot spend any more on the cards.

YorkshireBoy

WonkeyDonkey wrote: »

As I cannot use the cards (and would rather pay them off in the long term) would it be beneficial to reduce the credit limit once I have paid off a significant amount, say £500-£1,000?

That depends on your salary, total available credit, and total debt...amongst many other factors. Therefore it's impossible to give you a straight answer.

Just out of interest, why are the accounts 'closed'? Were they closed at your request using 'opt out' rather than having your rate hiked?...or did the lenders close them? The latter would seem a little harsh, unless you're not telling the whole story?

YorkshireBoy

Consumerist wrote: »

If the accounts are closed the credit limit is irrelevant.

That depends on how the accounts are shown on the credit report though.

If they're not 'settled' (and they can't be with balances still owing), then they'll just add to the OP's total available credit. Unless there's a marker ID for "can't spend any more"? Is there?

WonkeyDonkey

Consumerist wrote: »

If the accounts are closed the credit limit is irrelevant. You cannot spend any more on the cards.

Thanks Counsumerist. I've used the 30 day trial from experian in the past and remember that there was an 'available credit' section. My CC accounts also report that I have available credit although it isn't truly available.

If I'm honest I don't want to nibble away at the debt only for one of them to re-open my account, leaving me vulnerable to temptation.

WonkeyDonkey

YorkshireBoy wrote: »

That depends on your salary, total available credit, and total debt...amongst many other factors. Therefore it's impossible to give you a straight answer.

Just out of interest, why are the accounts 'closed'? Were they closed at your request using 'opt out' rather than having your rate hiked?...or did the lenders close them? The latter would seem a little harsh, unless you're not telling the whole story?

The Halifax was closed at my request to avoid a rate hike but the barclaycard was closed without my knowledge. I had dealt with a collector for the arrears but nowhere on the paperwork is there a reference to closing the account.

WonkeyDonkey

YorkshireBoy wrote: »

That depends on how the accounts are shown on the credit report though.

If they're not 'settled' (and they can't be with balances still owing), then they'll just add to the OP's total available credit. Unless there's a marker ID for "can't spend any more"? Is there?

Where would I find the marker ID?

Consumerist

That raises an interesting point. If the accounts are closed and no more spending is possible then, presumably, the "credit limit" is the outstanding balance each month. I must admit I don't know how that would be recorded on a credit file.