Effect of paying off defalts

hhhisariel

Hi.


On my credit report are two defaults totaling almost £1000 that I have payment plans for totaling almost £30 a month. I am currently in a position where I could pay off the whole amount. I would like to know if this would have an immediate effect on my credit score i.e. improve it?


Thanks in advance.

National_Debtline

Hi there and welcome to MSE,


Paying a default in full will help improve your credit file quicker than if you pay it gradually, however, it may got give you instance improve to your rating.


Credit files are quite complicated and your credit worthiness is constantly influenced by many factors to give you your overall rating. Future lenders do not see the score generated by the credit reference agencies, they only see your history. Your history shows things such as whether or not you are on the electoral role, anyone you have financial associations with and, of course, your financial history.


An outstanding default is more negative than a paid one. Once they are paid off you can start taking steps to improve your rating over time. Good luck,


Laura
@natdebtline

[Deleted User]

hhhisariel wrote: »

I would like to know if this would have an immediate effect on my credit score i.e. improve it?

As above.

Chances are good that your score will reduce when you clear the debts.

But it will improve your chances of future credit.

hhhisariel

Deleted_User wrote: »

As above.

Chances are good that your score will reduce when you clear the debts.

But it will improve your chances of future credit.

Thanks for the answer, but just checking did you mean reduce?

[Deleted User]

Yes.

Go down. Fall. Become lower.

hhhisariel

National_Debtline wrote: »

Hi there and welcome to MSE,


Paying a default in full will help improve your credit file quicker than if you pay it gradually, however, it may got give you instance improve to your rating.


Credit files are quite complicated and your credit worthiness is constantly influenced by many factors to give you your overall rating. Future lenders do not see the score generated by the credit reference agencies, they only see your history. Your history shows things such as whether or not you are on the electoral role, anyone you have financial associations with and, of course, your financial history.


An outstanding default is more negative than a paid one. Once they are paid off you can start taking steps to improve your rating over time. Good luck,


Laura
@natdebtline

Hi, to follow up then if a lender does not see my score but instead sees my credit history will they see that the account did default but then was paid off or will they just see that I had the account and cleared it?

hhhisariel

Deleted_User wrote: »

Yes.

Go down. Fall. Become lower.

Lol, I always thought I was trying to get my score higher. Whoops

glentoran99

hhhisariel wrote: »

Hi, to follow up then if a lender does not see my score but instead sees my credit history will they see that the account did default but then was paid off or will they just see that I had the account and cleared it?

they will see the default for 6 years

[Deleted User]

hhhisariel wrote: »

Lol, I always thought I was trying to get my score higher. Whoops

Nope. You're looking to build a good credit history. Reduce debts, don't default, make payments on time.

Never try to influence a fictional number.

hhhisariel

Gotcha.


So apart from those two defaults and I'm debt free, no credit card (apparently 20% acceptance chance so not gonna risk it), no loans and always pay all bills on time. And like I stated I'm paying almost £30 monthly to clear the defaults.


So overall the answer is if I pay off those defaults today over the next few weeks/months my 20% acceptance chance will increase but lenders will still see that at some point I defaulted until 6 years have passed.


Do I have that all right?

[Deleted User]

Pretty much. Lenders will but see that you defaulted but have now repaid. That is better than seeing that you defaulted and didn't repay.

How quickly any lender will look to extend credit to you will depend on their individual criteria.

Start building good credit with a card that you clear in full each month. Try aqua or Vanquis. Even if declined, all that will appear is one search on your files.

Take the acceptance scores with a large pinch of organic Himalayan rock salt as well.