Can I reduce the negative impact of a default?
Even if you can’t afford to pay the default right away, if you’re worried about having a default on your credit file, there are things you can do to reduce the impact of a default on your credit history. Lowell can offer you support and help you establish a payment plan that works with your budget, to make it easier for you to settle your debt.
Repay what you can
Try to pay off what you owe as soon as you can. This shows that you’re trying to clear the debt. Once the debt that caused the default is paid, it will be marked as ‘satisfied’ on your credit report, which is what lenders will see. We know that everyone’s circumstances are different and that paying off your debt may seem difficult, but if you work with Lowell on an affordable payment plan we’ll make sure that your payments work with your budget and help you to clear your debt. You can use our budget calculator to work out how much you can afford to pay, and work with Lowell to start working towards clearing your debt.
When lenders are deciding whether to approve applications for credit, they will look at more recent records first. So an older default may become less important on your credit file over time, and after a few years, you may find that you are more likely to be approved for credit.
Add a note to your file
If there were difficult circumstances when the default happened, you can ask the CRA to add a note onto your file. For example, if you fell into debt and your account defaulted because you were made redundant, or suffered a serious illness, you could add a note to help lenders understand the situation. This could help to offset the default’s negative impact if you need to apply for credit.
Look at improving your credit score
Your credit history is also used to create a credit score, based on the information in your credit file. You might be able to take steps to improve your credit score, which can help to reduce the impact of a default on your credit history. These steps include things like making sure you’re registered to vote and checking that your accounts are using the right address for you.
We understand that having a default on your credit file might be worrying. But by working with Lowell, we can help you to work towards clearing your debt and reducing the impact that a default has on your credit file. Start your journey to becoming debt-free today by arranging a fair and affordable payment plan with Lowell, or find more information about debt and working with Lowell in our Debt Guidance section.
First Published: 27th November, 2020