Credit Score Very Poor - Unpaid Defaults

LuckyJack1988

Hey,

I'm new to posting on Money Saving Expert, but I often use the great advice I read on this forum - I'm hoping you all will be able to provide me with some good advice!

Basically, my credit rating is very poor, and when I say very poor, I mean around the 200 credit score mark. I have a satisfied CCJ on my file which was for £800 - this was satisfied in October 2015. I do however have numerous defaults on my file, most of which remain unpaid.

These defaults were all entered mid 2014 so I've got a long time before they would be dropping off my account. I'm in the process of contacting my creditors to set up an affordable repayment plan in order to clear the outstanding balances, but having read a few articles / posts, I'm not sure if this is necessarily the right thing to do. I've read that sometimes the defaults can remain on your account for 6 years AFTER the closure of the account. This worries me A LOT ( I read this on the 'Improving your Credit Score' page on this website) - does this mean that if I spent the next 2 years paying off an account, that once it's satisfied and the account is closed the default then stays on my account for another 6 years?!

Basically, my boyfriend has just purchased a one bedroom flat on his own and I think somewhere down the line, we'd be looking at buying a larger property together but I know that having defaults on your account practically gets me an automatic decline!! so I suppose I'm just looking for advice on the best way in which to improve my credit rating.

Many thanks!

fermi

You refer to this?

Defaults or missed payments will usually stay on your file for six years. If you close an account, the missed payments could stay on the account for six years after the closure, so keep that in mind. Bankruptcy is wiped six years from the date you're declared bankrupt, provided it's been discharged.

Well, that is not very clear I must admit.

On a defaulted account, the whole account, it's history, everything and every trace is removed 6 year from the initial default. No exception.

It's only on non-defaulted accounts that late payments/arrears may show for up to 6 years from the account settlement.

Not exactly what you might expect, but that is the way it works, odd as it is.

LuckyJack1988

What if the account is never settled? I have a couple of accounts that I haven't made payments on in over a year and they are still technically classed as being 'Active / Open' on my credit record.

What do you think the best course of action is here? Does that mean these accounts will also drop off my credit file in 6 years if I do nothing with them. I don't know what is going to harm my credit record more. To settle the accounts within the next few months and they then remain on my file for an additional 6 years from the date of settlement, or to not bother with these accounts and hopefully they'll fall off my file.....but then, if they decide to default the account one year before they were due to drop off my file, this would then surely remain on my file for another 6 years from the date of default. Advice please!

fermi

A defaulted account is removed 6 years from the default, no matter what. Even if not settled.

An account that has never been recorded as a default, but is instead just late payments etc stays on your report for 6 years from the eventual settlement date, whenever that may be. Or 6 years from the default date, if they are then defaulted before you can settle them.

So if you sit on a non defaulted account hoping it will drop off, that's simply not going to happen.

but then, if they decide to default the account one year before they were due to drop off my file, this would then surely remain on my file for another 6 years from the date of default.

That scenario doesn't occur, as if not defaulted and not settled, the account remains on your report indefinitely anyway.

m4rc

fermi is totally correct with this, as hard as it is to believe and you will have many people say it's bad advice but it really isn't. I didn't believe it at first but sure enough that's how it is. Basically if they are registered as defaults they vanish 6 years from that date if you have paid or not paid. If they are not defaults it's a different matter.

However be aware they could take it to court and apply for a CCJ and that would be registered against you. If it's not a big amount they may not bother, you just need to keep it in mind as they theoretically could. As he debt is sold over and over it passes hands for less and less money, so it becomes less important to chase.

Only you can decide what to do, you will get people say morally you should pay, you will get others say let it time out and keep the cash.

Nasqueron

By the way, if you are in financial issues, cancel any subscription you are paying for at Experian/Equifax/CallCredit/Clearscore etc - the score they give you is meaningless junk

MaebyJade

LuckyJack1988 wrote: »

What if the account is never settled? I have a couple of accounts that I haven't made payments on in over a year and they are still technically classed as being 'Active / Open' on my credit record.

A default will drop off your file from the date it was registered. However, if the default/account is not settled then, as m4rc says, they could at any time apply for a CCJ which will then remain on your file for a further 6 years from time it's issued. I've read on here people having CCJ's put against them a few months before a default was due to come off their record, not ideal at all.

If you play your cards right then it's not unrealistic that you may be able to get a mortgage in around 4(maybe 3) years time. Your first goal is to try and clear these defaults as soon as you can, that will help you in when the time comes to apply for a mortgage.

You can also try and get a Capital One Credit builder credit card, not sure if you will be accepted for one now but they have pretty low requirements. The starting limit is £200 but it will get increased if you make full payments each month.

m4rc

Keep in mind if they do apply for a CCJ as long as they have your address you will get a letter from the courts. If you had a judgment I believe you have 28 days (correct me if I'm wrong someone) to settle and the CCJ is cancelled and will not show on your credit history.

fermi

m4rc wrote: »

Keep in mind if they do apply for a CCJ as long as they have your address you will get a letter from the courts. If you had a judgment I believe you have 28 days (correct me if I'm wrong someone) to settle and the CCJ is cancelled and will not show on your credit history.

Within one calendar month, strictly.

28 days would make more sense as it's not a slightly moving target, but the law says a month, which unless specified otherwise in the regulations means by or on the same date the month following that starting date.

A lot of places, especially on the web, do wrongly quote 28 days.

m4rc

fermi wrote: »

A lot of places, especially on the web, do wrongly quote 28 days.

Thanks for correcting, I wasn't sure. Although if you aim for 28 days you won't miss the pay by date I guess!

What would happen if you genuinely didn't recieve any paperwork in time, could you have a case to pay in full and have the CCJ removed?