Each year, millions of people miss payments on credit cards, personal loans, mortgages, payday loans, and other kinds of credit.
If these missed payments aren’t caught up with quickly, they can result in a ‘default’ – which is recorded on your credit file.
Getting a default removed from your credit report can seem like an uphill battle. A default is one of the most damaging marks that can appear on your credit report and can significantly lower your credit score. But contrary to popular belief, you can ask a company to remove a default in certain situations. Here is a comprehensive guide on how defaults work, when they can be removed, and the steps for requesting a removal.
What is a Default?
A default occurs when you are unable to make your minimum payment on a debt for several months in a row. Common accounts that can go into default include credit cards, personal loans, auto loans, and mortgages. After being 30-90 days past due, the lender will report the delinquency to the credit bureaus as a default. This signals to other lenders that you have been unable to repay a debt obligation.
Defaults can stay on your credit report for up to 5 years During this time, they will damage your credit score and make it more difficult to qualify for new credit Even after a defaulted account is paid off, it will continue reporting as a default until the 5-year period ends.
When Can a Default Be Removed?
In most cases, defaults cannot be removed until they naturally fall off your credit report after 5 years. However, there are a few scenarios where you can request early removal:
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The default was reported in error: If you have proof you were never late on your payments, you can dispute the default with the credit bureaus. The creditor will be required to verify the default, and if unable to, it must be deleted.
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The debt was victim of identity theft: If someone opened an account in your name and defaulted on it, you can request a removal after filing an identity theft report.
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You qualify for a goodwill removal: If the default was due to unusual circumstances out of your control, you may be able to negotiate a goodwill removal by contacting the creditor directly and asking them to take it off your report. Examples include serious medical issues, military deployment, or death in the family.
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The default should have already fallen off If the default should have already passed the 5-year mark but is still appearing you can dispute it with the credit bureaus to get it removed.
How to Request Removal of a Default
If you believe your default qualifies for removal, here are the steps to make it happen:
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Contact the creditor: Call the creditor for the account and explain why you think the default should be taken off your credit report. Be polite and honest about your situation. Provide any documentation you have to validate your claims.
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Dispute the default: If the creditor does not agree to a removal, submit disputes with Equifax, Experian and TransUnion. Explain the situation and your justification for removal. The bureaus are required to investigate.
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Submit a CFPB complaint: If disputes are unsuccessful, you can file a complaint about the creditor with the Consumer Financial Protection Bureau. This prompts the CFPB to launch an investigation.
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Consult a credit repair company: Professional credit repair services have experience negotiating with creditors for default removals. They can advocate on your behalf and help craft the necessary documentation.
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Wait it out: If you’ve exhausted all options, continue paying your bills on time and wait for the default to fall off your report naturally in 5 years. The impact lessens with time.
Getting a default removed requires persistence and patience. But clearing this major black mark can help boost your credit score significantly. With improved credit, you’ll have access to more affordable lending options.
Customer monthly repayments before and after entering a Trust Deed
Don’t panic if you’ve just missed a payment or received a default notice. Nothing is immediately recorded on your credit file.
However, if you don’t catch up with what you owe before the notice becomes an actual default, then the account default is recorded with a credit reference agency.
Since your credit history and credit score are closely linked, you’ll often find that a default makes your credit score go down.
This default will be visible to anyone who looks at your credit history – meaning lenders, insurers, phone contract providers, letting agents or landlords, and even some employers may get to see it. This can affect your chances of being offered credit. In some professions, it can even affect your chances of getting a job – although this isn’t common.
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Can I Remove Defaults Without Paying?
FAQ
How do I get a company to remove a default?
Request default removal: If you have a legal right to contest the default, contact the credit reference agency displaying the issue and argue your case with them directly. If the problem is that the default has been repaid, make sure you have evidence of this to hand.
Can you ask for a default to be removed?
Can I get someone to remove a default? You can only get a default removed from your credit report if you can prove that it was an error.
How much does it cost to remove a default?
Default removal fees start at $1650; no payment plans are available, but you only pay once we are successful with our work.
Can a default be undone?
… default judgment was appropriately entered against you, you must file a motion with the court asking the judge to “set aside” (void or nullify) the judgment