How much will this default hurt me?

[carolemoler]

Hi,

Anyone know the answer to this???

I have recently had a default logged on my credit file - long story but it is what it is.

Does anyone know how this will affect me? I know that it will stop me from obtaining credit for 6 years, but that's not really a concern. I have some other credit card etc - will these companies know that I have a default and will they close my accounts etc?

It won't necessarily stop you getting credit for six years - it'll take six years to drop off your credit account, and while it's new, you probably won't be offered much more. Have you paid it now? If so, it'll show as settled, which is better - if not, it'll be more of a concern to other lenders.

Your existing lenders will be able to see that you have now got a default, yes. Some respond - Next, for example, are famed for removing credit facilities if your credit file shows any negative, Natwest can be very cautious too and drop credit limits, some don't care as long as your account with them is up to date. Regardless, none are likely to offer you more credit (such as limit increases) for a while.

If it's not paid and becomes a CCJ, which isn't a guarantee but can happen, that'll have more of an impact.

When I was in my early 20s, just after leaving Uni I got a default related to my overdraft for my NatWest student account (bastards!) when they passed the debt to a collection agency to recover.

I paid it off in instalments over a year, but the default stayed on my credit file for 6 years from the date the debt was marked as settled. The 6 years only begins once you’ve paid it off, not from when the default was lodged.

As singwithme says, other companies you have credit agreements with won’t close your accounts or withdraw your credit facilities but until this is paid and off your file, you are likely to find it more difficult to get approved for any new credit/increased limits etc, and anything that will be available will be at an extortionate interest rate and probably a very low amount you can borrow.

Since my late 20s, I’ve made sure I maintain and protect my strong rating. I’d also recommend regularly checking your credit report at least every month to ensure any updates and changes are accurate.

My hard earned advice would be to do whatever you can to prioritise getting this debt cleared ASAP so that the 6 year clock can start ticking down. I wish I’d known as a dumb 20 year old the implications of having a crappy credit rating - the more you know eh?!

All the best of luck getting this cleared.