How does a default effect my credit rating?

rp.

I entered into a contract two months ago. The contract was for the supply of services over a nine month period. The price was exactly £900, payable over nine months.

For various reasons, which I believe are justifiable, I have now decided that I do not wish to receive this service. I have so far only made one payment of £100 on 5 March. A second payment of £100 was due on 5 April, but I have not yet paid it. I have decided not to make this payment or any other payments.

Aside from the legal points on the contractual agreement, I would be very grateful if anyone could provide any advice or insight into how my long-term credit rating might be effected by effectively defaulting indefinitely on the remaining £800?

I look forward to any comments or suggestions. Thanks.

P.S. Apologies if I have chosen the wrong forum for posting this. Thanks.

jamalfatty

A credit file shows the date an agreement started so if you default on it one month after it started it is not going to look good at all and wouldnt be suprised if most companies wouldnt touch you with a barge pole for next 6 years.

jay78

I don't know what this service is but if you have entered into an agreement and signed a contract (and have exhausted any trial period)if you choose not to pay for it you are in breech of this contract. The company may go to court to get payment from you resulting in a CCJ on your credit file. You will not be able to get any good rates for credit cards etc for 6 years.

nomoneytoday

I would suggest a better way would be to contact the company directly and come to an amicable arrangement.

rp.

jamalfatty wrote: »

... wouldnt be suprised if most companies wouldnt touch you with a barge pole for next 6 years.

After years of meticulously managed credit cards and numerous personal loans paid in full, and you're saying that after one installment paid 10 days late that no other lender will want to deal with me for 6 years?

How is this so?

jamalfatty

rp. wrote: »

After years of meticulously managed credit cards and numerous personal loans paid in full, and you're saying that after one installment paid 10 days late that no other lender will want to deal with me for 6 years?

How is this so?

You didnt say the payment has been made albeit 10 days late, you said it was already late and you had no intention of paying it or any future instalments - hence you would probably get defaulted for it and my original point stands.

rp.

I apologise. It was my first payment which was made 10 days late. You are right to confirm that the second payment has not yet been made.

So a full default would result in an adverse credit rating. Would it really be as adverse as you say?

icklejulez

One default 5 and a half years ago has made my life a living hell! In 6 months my life will feel a million times better!

rsykes2000

Yes a single default can be that bad. I had one registered on my credit history due to ID fraud, the rest of my credit history is basically excellent - no missed payments on mortgage, CCs, loan etc. This single default meant I failed a CC credit check and that my own bank wouldn't even increase my overdraft for 2 weeks by an extra hundred pounds until my house sale completed. I managed to get it removed as it wasn't my fault it was on there (as I said, someone had used my ID to buy something then defaulted on payments) and have had no further credit-related problems.

CLAPTON

a unsatisfied default (i.e. one you haven't paid) says that you have a debt that you can't pay.
so why would anyone lend money to someone who can't pay their existing debts.
Now you may have a very real reason for not wanting to pay but potential lenders will see it as 'cant pay'.

rp.

Thank you for all the advice.

I have decided to not default. But instead, agree a reduced amount to pay for immediate termination of the contract.

I agree that it would not be a good idea for a default to appear on my credit history.