Defaults and default notices on your credit file

A default is the point at which a lender decides a credit agreement has been broken for good: the account is closed to further borrowing, the full balance becomes payable, and a default entry is added to your credit file, where it stays for six years¹. Before most lenders can take that step on a regulated debt, they must send you a default notice, a formal warning letter that gives you a set period, usually 14 days, to catch up on the arrears before the account defaults¹. The notice itself does not touch your credit file; it is the default that follows which does¹.

A default normally occurs when you have not met the terms of a credit agreement and your account is three to six months in arrears². It makes borrowing harder, but it is not the end of the road: the entry drops off after six years whether or not the debt has been repaid³, and there are routes to challenge one that has been recorded wrongly. This page explains each stage, from the first warning letter to what happens when the debt is sold on, and where to get free help at each point.

A default notice is a warning, not the default itself

The two things are often confused because they share a name. A default notice is a letter the people you owe money to send to warn you that you are behind on payments and that your account may default¹. The default itself is what happens if you do not put it right: the account is recorded as defaulted on your credit file, and the lender can then demand everything you owe rather than just the arrears¹.

The distinction matters for what each one does to you. A default notice does not affect your credit file, but the account defaulting does¹. Receiving the letter is not the black mark; it is the last chance to avoid one.

The default notice is a legal requirement under the Consumer Credit Act 1974 for most consumer debts. A creditor must issue one before demanding repayment of everything owed or before terminating the agreement⁷. The Act sets out what the notice must contain: it must specify the breach, the action needed to remedy it, and a date by which that action must be taken, and that date must not be less than seven days after the notice is served⁸. The notice must also set out the consequences of failing to comply with it⁹, and since 2008 it must include a copy of the current default information sheet, an official explanation of your rights at this stage¹⁰.

One limit on what a notice can demand: it cannot treat as a breach a failure to comply with a provision of the agreement that only becomes operative on breach of some other provision⁹. In plain terms, the notice must be about what you have actually broken, not a knock-on effect of it.

When a default notice is sent and what it must say

Lenders do not send default notices after one missed payment. The people you owe usually send one after six months of missed or reduced payments¹, and ombudsman data on lending practice describes the typical point as when the consumer is between three and six months in arrears¹¹. The Information Commissioner's Office guidance puts the same window on the default itself: a default normally occurs when you have not met the terms of a credit agreement and your account is three to six months in arrears².

Default notices apply to debts regulated by the Consumer Credit Act, which includes credit and store cards, payday loans, personal loans and hire purchase¹. Different products follow the same pattern with their own timing:

The notice itself tells you that you have missed payments, what you need to do to put it right, and by when⁷. It asks you to pay the full amount owed instead of instalments¹, which is the practical shock for most people: the letter is not asking for the monthly payment, it is asking for everything.

One point worth knowing about the rules around timing. The ICO states that while it may be a requirement of the Consumer Credit Act to issue a default notice, there is no data protection obligation on a lender to issue one before marking an account as in default on your credit file¹⁵. Industry guidance reported to the ombudsman goes further, suggesting lenders should notify consumers of their intention to register a default at least 28 days before doing so¹¹. In practice most lenders send the notice first, but the legal position is narrower than people assume, and the dedicated page on whether a default can be recorded without a default notice covers that gap.

14 days to act: your options after a default notice

The default notice gives you 14 days to make up any missing payments¹⁴, and the same 14-day period appears across independent guidance: you will be given 14 days to respond¹⁶, and a default is what happens when you cannot get up to date within 14 days⁴. The legal minimum in the Act itself is shorter, a date not less than seven days after service⁸, so a notice that gives you only seven days can still be valid, while most lenders give two weeks or more. Help to Buy: Wales uses a longer period, with its default notice providing 28 days' notice to make good the arrears¹⁷.

Within that window you have three broad options:

1. Pay the arrears in full. If you clear the missed payments within the 14 days, the account does not default, and no default entry is added⁴. If you put right a just-missed payment immediately, the lender may not mark it on your credit file at all¹⁶.
2. Contact the lender and propose a repayment plan. Your credit file is affected any time you pay less than you agreed when you took out the debt³, so a reduced plan does not keep the file clean, but it can stop the account defaulting and stop further action. FCA rules require a firm that rejects a repayment proposal from a customer in default or arrears to give a clear explanation of the reason for the rejection¹⁸.
3. Get free debt advice before responding. A debt adviser can help you work out which debts are priority debts, the ones with the most serious consequences if unpaid, before you commit money you may need elsewhere¹⁹. Free, impartial help is available from charities such as StepChange and National Debtline, and the debt section of this site sets out the options.

The notice is also the point at which the lender sets out what happens next if you do not comply, which the Act requires it to do in prescribed terms⁹. Read that section of the letter carefully: it tells you which of the actions in the next section this particular lender intends to take.

What a default does to your credit file and borrowing

Once the account defaults, your credit file will show that you did not make your agreed payments, and this impacts your credit score¹. The entry is visible to other lenders when they search your file, and creditors may think the default makes you high risk to not pay them back¹. That makes it harder to get:

• new loans
• a new credit card
• a new mortgage
• certain bank accounts¹

The effect is not limited to the defaulted account. A default notice will negatively impact your credit rating for six years, and would be quite damaging for future financing plans¹³. If the debt was a guarantor loan, the default gets recorded on both credit files, yours and your guarantor's²⁰. And if you took out credit in your own name for another person, the default appears on your file, not theirs, because the agreement is yours²¹.

The practical consequences after the default depend on the type of debt. The creditor can close your account and demand all payments in full¹⁶. On a personal loan, action that can be taken includes reminder letters and telephone calls, additional interest and charges, further court action such as a County Court judgment, or the debt being passed to a debt collection agency²². On hire purchase, the creditor can ask a court to take back the vehicle or other goods¹. On a guarantor loan, the debt can be passed to a collection agency and court action might be taken²⁰.

For mortgages specifically, the record compounds: if you have fallen behind with your mortgage, this shows as a default on your credit file, and details stay on the credit reference agency's files for six years from the date the default was registered²³. With a poor credit rating, you may only be able to get further credit at a high interest rate or secured against your home²⁴, which is why a default can raise the cost of borrowing rather than simply blocking it.

One narrow exception worth knowing: under temporary FCA guidance issued during the coronavirus period, a worsening status was not to be reported to the customer's credit file in respect of a payment deferral taken under that guidance, though lenders could still take other information into account when making future lending decisions²⁵. That guidance applied to deferrals under those rules, not to arrears generally, and the page on Covid-19 payment holidays and your credit file covers it.

A default stays on your file for six years

The six-year rule is consistent across every source: a default stays on your credit file for six years³, six years from the date added⁵, six years from the date of default²³, six years from when the account defaults²⁶. Defaults make it harder to borrow more money precisely because they stay on your file for six years²⁷, and the same six years applies to missed payments and court judgments recorded alongside them²⁷.

The part that surprises most people is that repayment does not shorten the period. If an account has defaulted, the debt is removed six years after the default, even if it is not fully repaid⁵. Information about the debt is taken off your file after this time has passed, even if you still owe it²⁸. Debts show on your credit file for six years from the date they are paid off, or the date the account defaulted, whichever comes first²⁸.

What that means in practice:

• Paying in full changes the marking to satisfied, but the six years still runs from the default date⁶.
• A partial settlement is recorded differently, and the page on default vs partial settlement explains the difference.
• The entry is removed automatically; you do not need to ask for it to be taken off⁵.
• Six years is also the period after which many debts can become statute barred, meaning the creditor can no longer enforce them through court, though the rules differ between England and Wales, Scotland and Northern Ireland. The page on statute-barred debts and your credit file covers this separately, because a debt dropping off your file and a debt becoming unenforceable are two different things.

The general page on how long information stays on your credit file sets out the retention periods for every kind of entry, and what is on your credit report shows how a default sits among them.

Paying off a default: what 'satisfied' means

Paying the debt does not remove the default, but it does change how the account is shown. Debts repaid in full are marked as either "satisfied" or "settled" depending on whether the account defaulted⁶. If you repay a debt in full, it should be marked as satisfied on your report²⁹. The full balance settlement route means paying a lump sum big enough to repay your debts in full, and the debts are then marked on your credit file as satisfied⁶.

The same marking applies to secured debts. Your credit file should be marked as satisfied if the sale of your house covers the outstanding mortgage debt, or if you clear any mortgage shortfall afterwards³⁰.

Two related markings matter:

• Partially satisfied. If a creditor issued a default notice before agreeing to write off the debt, they are likely to mark the account as partially satisfied³¹. This is the usual outcome where a lender accepts less than the full balance.
• Zero balance on write-off. If a creditor agrees to write off your debt, the balance shown on your credit reference file should be set to zero³¹.

In Scotland, court judgments work slightly differently: once a decree is repaid in full, you can obtain a letter of satisfaction, which must show the name of the court, the case number, the date of decree, the amount of decree, and the date the debt was repaid in full³². The narrow page on getting a Scottish decree marked as satisfied covers the process, and getting a certificate of satisfaction for a paid CCJ covers the equivalent in England and Wales.

The Consumer Credit Act also uses "satisfaction" in a narrower sense for section 75 claims: a debtor is deemed to have obtained satisfaction where they have accepted a replacement product or service or other compensation from the supplier in settlement of the claim³³. That is about card claims, not credit file markings, but the word appears in both places and is worth separating.

When a debt is sold to a debt collector

Defaulted debts are often sold on. If the original creditor has sold the debt to another company, the new company becomes the creditor and must deal with your request for information about the debt³⁴. The buyer has a legal duty to make sure you are told: where a customer's debt is sold on, the creditor who buys the debt must ensure the customer is informed of the assignment, either itself or by arranging for the selling creditor to do it³⁵.

What changes for you when the debt is sold:

• The amount you owe does not change because of the sale itself. A creditor who is not complying with your request for information can still add interest and charges in line with your terms and conditions, send a default notice, pass your information to a credit reference agency or debt collector, sell your debt, or take your case to court without getting a judgment³⁴.
• You direct payments and correspondence to the new owner, not the original lender³⁴.
• The default entry itself is not restarted by the sale. The rules on how long it can show are unchanged.

That last point is where problems arise. The ICO states that if entries are recorded on your credit file in a way that may look like two different debts, or that could make the debt remain on your credit file for longer than six years from the date of the original default, it is unlikely the ICO would consider this to be fair¹⁵. A sold debt should appear as the same account, updated to show the new owner, not as a fresh default with a new date. If you see the same debt twice, the page on a sold debt showing twice on your file explains what to do, and how to correct wrong information on your credit report covers the dispute process generally.

Challenging a default that is wrong

Defaults are recorded by lenders and credit reference agencies, and they do get things wrong. Complaints data gives a sense of scale: the Financial Ombudsman Service recorded 934 complaints opened about credit records in 2025/26³⁶, and 5,783 about credit cards in the first quarter of 2026/27³⁷. Credit record complaints include disputes about how defaults and other entries have been reported.

You have a formal route to challenge an incorrect entry. Under the Consumer Credit (Credit Reference Agency) Regulations 2000, an application by an objector must give particulars of the entry in the file, state why it is considered incorrect, and why prejudice is likely if it is not corrected³⁸. In other words, you need to say what the entry is, what is wrong with it, and how it harms you.

The steps, in order:

1. Check your credit report first. You can do this for free, and the page on how to check your credit report for free explains how.
2. Raise the dispute with the credit reference agency and the lender. The page on notice of correction vs raising a dispute explains the difference between fixing the entry and adding an explanation to it.
3. Complain to the lender directly if it recorded the default wrongly. FCA rules require a firm that rejects a repayment proposal from a customer in default to include a clear explanation of the reason for the rejection¹⁸, and the same expectation of clear reasons runs through complaint handling.
4. Take an unresolved complaint to the Financial Ombudsman Service, free of charge, if the lender or agency does not put it right within eight weeks or you are unhappy with its final response.

The ombudsman does order entries to be removed where the lender was at fault. In one published case study, a customer named Catherine complained after a car accident left her unable to make loan payments; the redress ordered included removing the negative judgement from her credit file³⁹. In another, a customer named Renee had five defaults in the preceding 12 months with a total balance of over £1,400 on her file before taking a logbook loan, and the case examined what the lender should have made of that history⁴⁰. These are individual decisions, not guarantees, but they show the ombudsman can require a file to be corrected.

A separate historical point on charges rather than entries: the OFT began an inquiry into credit card default charges in 2003 and in 2006 found that many were unlawful⁴¹, and the FCA's later rules include the requirement not to impose default charges which are higher than necessary to recover a firm's reasonable costs⁴². If a default on your file is inflated by charges that should not have been there, that is part of what a dispute can address.

Rebuilding your credit after a default

A default is one of the more serious entries on a credit file, but its effect weakens over time, and there are things that help. The entry itself cannot be removed early by paying, and credit repair companies that promise otherwise should be treated with caution; the page on credit repair companies and fixing your credit file yourself covers what they can and cannot do.

What the evidence supports:

• Mark the debt satisfied if you can. A satisfied default reads better to lenders than an outstanding one, even though both stay six years⁶.
• Keep any remaining accounts in good order. Defaults stay on your file for six years, and the effect on your score fades as the entry ages and as newer, clean payment history builds up²⁷. The page on how to improve your credit score sets out the steps that work.
• Check that a write-off was recorded correctly. If a creditor agrees to write off your debt, the balance shown on your credit reference file should be set to zero³¹, and the account should be marked partially satisfied if a default notice had been issued first³¹.
• Ask for errors to be corrected rather than waiting. Where a lender's own failings caused the record, the ombudsman can order removal, as in Catherine's case³⁹.
• Expect higher costs in the meantime. With a poor credit rating, you may only be able to get a loan at a high interest rate or secured against your home²⁴, so borrowing less, or waiting until the default ages, tends to be cheaper.

If the default came out of a wider debt problem, the pages on debt solutions and your credit file and rebuilding your credit after bankruptcy, an IVA or a DRO set out how each solution is recorded and what recovery looks like afterwards. Free, impartial debt advice from charities such as StepChange and National Debtline is available at any stage, and the Financial Ombudsman Service is there if a lender or credit reference agency has treated you unfairly.