Will paying a defaulted debt improve my credit score?

macguffin

I have a defaulted balance of around £250 from two years ago, originally owed to Vodafone, now with Lowell. Otherwise, my credit standing would seem to be good: a credit card that is regularly paid, and a mobile phone account, no CCJs.

Will paying this amount to Lowell, either in full or part, improve my credit score appreciably? I would like to apply for a small loan, but I have already been rejected by one lender. I don't want to be rejected again.

Any advice appreciated.

[Deleted User]

It will make you look a lower risk to lenders.

Anything it does to your credit score is irrelevant as no one sees this.

Candyapple

You have a 2 year old default so forget about being accepted for loans because it's not happening, not unless you are happy paying some ridiculously high APR or a payday loan.

There is no such thing as a credit score - it's just a marketing gimmick and means nothing.

Even if you paid off the debt, it will just be marked as satisfied, however this means nothing as the default still stands and that is what will cause you problems for the next 4 years.

If you need money for a loan, try working out a budget and head over to the DFW board on here for advice. Or ask your family/friends for help, or sell anything you have that you no longer need.

macguffin

@ Candyapple

Thanks for your frank answer.

Is there any room for negotiation with a company like Lowell ie. if I pay in full, could they be persuaded to remove the default? I have no idea of such a thing is even possible, but I just thought I'd ask here.

If not, I'll just have to wait four more years for it to drop off my report.

Candyapple

You can try to negotiate the default being removed, yes this is possible. You should keep everything in writing so you have a written record should they not stick to their word.

The ball is actually in your court because Lowell would have bought the debt for pennies, so even if they received the entire sum, or half of it, they are quids in.

Some debt collector companies are easier than others with regards to getting them to remove the default if you pay up. Google 'negotiating default removal' and have a read through the threads, there should be a template letter amongst them that you can copy/paste and adjust to your situation.

macguffin

@ Candyapple

Thanks very much. I will look into that.

Anthorn

macguffin wrote: »

I have a defaulted balance of around £250 from two years ago, originally owed to Vodafone, now with Lowell. Otherwise, my credit standing would seem to be good: a credit card that is regularly paid, and a mobile phone account, no CCJs.

Will paying this amount to Lowell, either in full or part, improve my credit score appreciably? I would like to apply for a small loan, but I have already been rejected by one lender. I don't want to be rejected again.

Any advice appreciated.

If you pay up the account status changes to "Satisfied" and that's better than a default. But the account is not removed and the default is still in the account history.