When will a default disappear from credit report?

Edmond_2

I've read in various places that a default will disappear off your credit report after 6 years. This is apparently irrespective of whether you've ignored it, paid it off, or are in the process of paying it off.

This seemed too good to be true, so i did some further googling and got a very mixed bunch of answers.

Here's my situation - I defaulted on a rather large, unsecured personal loan in 2012. The amount went to collections, to whom I have been paying monthly installments ever since. This appears as an account on my credit report, as a HSBC personal loan, with a default date, and a monthly status showing 'default' and the balance.

So what will happen in 2018? Will this account 'dissapear' (or at least be filtered out of searches, for pendantic readers). Will the account remain,as long it's being reported each month?

I need a straight answer, as clearly this affects how I manage my finances. I can deal with the small monthly payments, it's my credit score I'm concerned with. This default has made it very hard for me to get credit anywhere, and if it doesn't disappear... Well let's just say my daughter starts school this September, and it'll be paid off in time for her GCSEs. So whether or not the six year thing is true is the difference between this being my highest priority debt and my lowest priority (no interest on it).

Edit: I forgot to say, for some reassurance I'd like to see some evidence of this, or hear from someone who's had it happen to them. Specifically I'm taking about balances maintained, that won't be cleared after six years from the default date. Would any of this be in at policy documentation of the credit agencies? Is it a legal requirement? Etc

[Deleted User]

6 years from when it defaulted.

The monthly 'defaults' are just a status update.

DCFC79

Your score isnt important, the default was 4 years ago so it shouldn't be an issue but that doesn't mean all lenders will see it that way.

Edmond_2

I'd have thought the balance would be the issue. It was nearly 10k. And there's not a whole heap else negative on there.

When I said 'score' I meant the general impact on my ability to get credit, rather than specifically the score.

smdabs

This very much depends on the type of loan, the length of it, the balance (without the added arrears)


To explain what I mean,


Say i had a mortgage which i got out in 2000 for 25 years. I defaulted and went into arrears in 2010. I arranged a payment plan to pay off the arrears as well as the monthly payment. I completed payment plan in 2012. Therefore, technically speaking, the default should fall off in 2018...


HOWEVER, because it is the ACCOUNT that showed as defaulted - if no action is taken by me to have this amended in 2018 - my account will show as defaulted until the end of the term of the mortgage (2025).


This also applies with loans.


Also, it is not from the date of the first default, it is from the date you CLEARED the default. You are still making payments to collections so to my knowledge, your credit file will actually show your account as currently being IN default (while the payment plan is in place) it would only be removed 6 years from the date you FINISH your payment plan. So, say you pay off the payment plan with collections on 30/06/16, the account will show it was defaulted until 30/06/2022.


This is just from my experience from working within a bank though so if anyone has more accurate information - please do correct me if im wrong.

fermi

Edmond wrote: »

I need a straight answer, as clearly this affects how I manage my finances. I can deal with the small monthly payments, it's my credit score I'm concerned with. This default has made it very hard for me to get credit anywhere, and if it doesn't disappear... Well let's just say my daughter starts school this September, and it'll be paid off in time for her GCSEs. So whether or not the six year thing is true is the difference between this being my highest priority debt and my lowest priority (no interest on it).

Edit: I forgot to say, for some reassurance I'd like to see some evidence of this, or hear from someone who's had it happen to them. Specifically I'm taking about balances maintained, that won't be cleared after six years from the default date. Would any of this be in at policy documentation of the credit agencies? Is it a legal requirement? Etc

Yes, it is six years from the initial recorded default date.

That is an actual default. Not arrears, or an arrangement, or and other type of flag/marker/status.

At the 6 year point from the initial default date, ALL data about the account is removed from the CRA. Doesn't matter if the creditor continues to report an outstanding balance. Nothing shows. No trace. It's as if the account never existed as far as your credit file goes.

Possible confusing factors are when:

- You get a default notice letter under the consumer Credit Act as you have not kept to the original agreement terms, but that doesn't result in a credit file default as arrears don't get bad enough. A default notice letter under the CCA is NOT the same thing as a default on your credit file. Same word, but different usage and meaning in that context.
- Or a "notice of default sums" is another similar thing which is NOT the same as a credit file default being registered.
- Similarly people or companies may use 'default' to refer to any missed payment, as missing one without agreement is technically defaulting in that sense.

As far as your credit file and retention of data is concerned, it is the an actual default on the CRA file which is defined as:

See: https://forums.moneysavingexpert.com/discussion/3172602

"the lender considers the relationship between itself and the individual to have broken down"

not any of the other meanings.

This can as said be confusing, because if there is not an actual default recorded on your credit file, completely different time scales apply.

i.e. the account stays on file for 6 years from eventual settlement/satisfaction date.

See: https://forums.moneysavingexpert.com/discussion/4756875

Edmond_2

Thanks Fermi, that seems to make sense.

The only markers appearing on it currently are default flags, plus there's a default date. Looks fairly definitive.

In any case, I shall bring this thread back from the dead in late 2018 let you all know!

fermi

The "default date" "date of default" or however they word it in the main section is the crucial date.

The DDDD or 8888s in the status history are just that, status updates and not the original default.