What is a default?

Feanor

Hi

Can someone explain to me what a default is?

I am ordering our credit reports from experian tomorrow, and i feel really nervous and worried for some reason! What is a default, i keep reading it on this site.

The only thing we have is a few late payments on credit cards and things, how much is this going to affect our chances of getting the mortgage we want?

Thanks.

Leon_W

A default is where you have entered into a credit agreement with a company (say a personal loan) and have broken the agreement by not paying it back.

This is not the same as making late payments on credit cards, this will lower your credit rating but not preclude you from obtaining a mortgage. It really depends on how many are 'a few' late payments. Lenders will take differing views on this.

Feanor

Thanks! Thats good then, definately not had any of them.

Well i have had one late payment on a staff discount credit card type thing, but my other half has had probably about 5 late payments in the last 2 years on his credit card! Due to forgetfulness in all honesty (nno excuse i know, ive tried telling him!). The balance is now cleared on that one anyway.

When you pay off a balance of credit cards etc, does this boost your credit record?

Also, do you know how long it takes to show up on your credit file when you have paid balances off things?

Thanks!

MortgageMamma

It can take up to 28 days for cleared balances to show on your credit report

Leon_W

Even I forget to pay my credit card sometimes. These things happen. What lenders don't like is repeated late payments and patterns that show that someone is on the slippery slope.

I'm not sure that paying it off helps that much as a lender is more interested in whether you can handle credit responsibly from a creditworthiness point of view. Although it does help to have repaid any debt as this affects the amount a lender is prepaired to advance.