How do defaults work?

A default is a financial term, used when a credit agreement has been broken. If you’re unable to make payments or you don't pay the right amount, your creditor may send you a default notice. If the default is applied, it could affect your credit file. Even if you have a default on your file, you can reduce the impact it has on your credit by working with Lowell on an affordable and reasonable payment plan. Find out more about defaults, including how long a default stays on your credit file, how to have a default removed and how working with Lowell can help with a default.

In this guide:

  • What is a default on a credit file?
  • How to get a default removed from your credit file
  • Can I reduce the negative impact of a default?

What is a default on a credit file?

A default on a credit file happens if you’ve been unable to keep up with payments on an account. For example, on a utilities account, or a mobile phone contract. If you aren’t able to keep up with payments, your creditor may get in touch and send you a default notice, informing you that the agreement you made has been broken and that the account will default if you are unable to make the payment. If you need more information about credit files, we have a guide to how your credit file affects you, or you can find free independent advice at Money Saving Expert.

The default notice will give you a warning and a ‘grace period’ of enough time (usually 14 days) for you to make missing payments if you’re able, before the default is applied to your credit history. If you receive a notice and you’re able to clear the missed payments within the 14 day period, then your account won’t be defaulted and it will show on your credit file as ‘settled’, showing that you cleared the balance and took responsibility.

If you’re unable to make a full payment within the grace period, a default will be applied to your credit file. If your credit history shows a default, it could be more difficult for you to borrow money or apply for loans or other forms of credit. But be reassured, there are ways you can reduce the impact of a default, especially if you take steps to start paying the debt. Lowell are here to help by working with you to create an affordable and reasonable payment plan so that you can settle your debt.

Why have I received a default notice?

A default notice is usually sent after several payments have been missed. This depends on the company. Sometimes you’ll receive a notice after missing three months of payments, but with some companies it can be up to six missed payments.

You might get a default notice from any creditor or credit provider, like credit card or loan companies, but you could also receive them from utility providers, mobile phone companies or payday loan companies.

Can Lowell register a default?

Usually a default on your credit file will date back to the original lender you had a credit agreement with. Once Lowell has purchased your debt, the default transfers along with the debt – so a default on your credit file may show as coming from Lowell even if it was initially registered by the original company. When a default is registered in Lowell’s name, we have a responsibility to make sure the info is up to date and accurate.

Alternatively, if Lowell purchased the account at pre-default stage then Lowell may default the account if payments do not meet the original contractual terms.  If you think that a default is incorrect, or if something isn’t right, please get in touch and let us know.

How long does a default stay on your credit file?

A default will remain on your credit file for six years. After six years, the default will be removed, even if the debt from the default hasn’t been fully cleared.

How to get a default removed from your credit file

Once a default has been recorded on your credit file, it will remain for six years, but there are steps you can take to reduce the impact it has on your credit.

If you’ve looked at your credit report using one of the free checks and find a default on your credit file that you think is incorrect, don’t worry, you can ask for it to be updated or removed from your credit file.

You’ll need to raise a credit report dispute with each of the credit reference agencies, by getting in touch with them and explaining why it should be changed. They will speak to the original lender to check their records and/or Lowell. While the original lender investigates, you can rest assured that any other companies or lenders who need to run a credit check on you will know that the default on your file might not be accurate.

Can Lowell remove a default from my credit file?

If you’re concerned that Lowell have added a default to your credit file that shouldn’t be there, you can get in touch with us to let us know. Our team will investigate the issue and assess how it needs to be resolved.

If your account has defaulted, Lowell can’t immediately remove a default from a credit file, but if you’re working with us on a payment plan, we’ll let the credit reference agencies know that you’ve started making payments. Once the debt is fully paid, we’ll make sure that your credit file is updated. If you paid your debt off without a discount, your credit file will be marked as ‘satisfied.’ If you paid your debt off with a discount, the default will be marked as ‘partially satisfied', which shows that you cleared the debt at an agreed reduced balance.

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