Helped needed to understand credit score

samuelj_2

Hi all, hopefully I won't appear too stupid.

SOme background, I divorced about 4 years ago and my finances got a bit out of hand. I have anaged to get them back on course, but have no joy getting credit. I earn 40k, I have one CC with £550 limit which I use but keep up regular payments, other than that I have no recorded debt. EXCEPT one credit card that I defaulted at the time of the divorce, I lost my job and couldn't keep up payments. I subsequently reached a settlement to pay back £50/mth to the company they sold my debt to, which I have been doing wthout fail. However, it still shows up every month on my credit file as a default, is this correct, what is my best course of action, my credit score was 358 on equifax up until christmas, but has now dropped to 297, I don't understand and dont know what I can do to fix it?

Tixy

Don't worry about the scores, nobody ever sees them but you and the credit reference agency.

The credit account with the defaulted debt will continue to show on your file for 6years from the date of default. If you manage to pay it off before the 6years are up then it would then show as a satisfied default for the remaining period.

Even if it is not fully paid at the 6year point the entry will still drop off your file.

In terms of your credit file, a default is a big negative and going to stop a lot of lenders from lending to you. Only time can really help with this.

The other credit card, keep doing as you are on that, making all payments on time, keep within terms etc. In the longer term once the defaulted debt has dropped off this credit card will then help demonstrate a positive credit history to potential lenders.

samuelj_2

Thanks Tixy, someone told me that I could negotiate paying the debt off in full in exchange for removing the crdit default, is this true, and would it have an immediate effect?

Thanks again.

Tixy

It is unlikely that the creditor will agree to remove the default in return for full payment. Is the entry on your credit file still in the name of the card company, or is it showing in the name of a debt collector?

Some lenders did used to do this sometimes, but it tended to be phone companies and catalogue companies not banks/credit card companies.

Where some people did manage to negotiate removal this may then be replaced with a record of missed payments instead.
Accounts with a default drop off 6years after the default, accounts without a default remain on file for 6years from the date the account was settled/closed.
So this actually had a longer term impact on their credit file, as the missed payments remainined visible until 6years after the account was settled.