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You Are Here: Home > Personal Finance > Credit File Help > How to remove a default
Last update : October 2013
How to possibly remove a Default Notice

from a Credit File

Page Summary :

This guide looks at a strategy that may be able to remove a Default Notice from a Credit File.

It takes some perseverance, and can take up to 6 months to get a result. However, if you have a default against your name it might be your only option.

The following strategy to removing a Default was first published about 4 years ago and then it's success rate was high.

However 2 factors have been at work -

  1. The recession - The banks all seem to have tightened their internal procedures and are basically playing hardball with all their clients, whether defaults or other matters , and
  2. The strategy is now quite well known and in this case the more popular something is its effectiveness often gets diluted

Luck plays a massive role these days

In correspondence with people over the last year I have come to the conclusion that luck plays the dominant role in trying to get a default removed. Some people are writing just the one letter and bingo, it's removed. Others however, in fact the majority, seem to be coming up against a brick wall.

Another trait that I have seen with successful attempts to get a default removed is persistence. Some people are just not giving up and trying every angle possible. And if those don't work they think hard and try some more.

Persistence is therefore the key and it all depends on how much you want the default removed. However, if you've exhausted every available idea then there's only one thing to do, accept the default or CCJ and follow this intensive strategy to improving your credit file over the next 6-24 months, it's tried and tested and very effective.

Also, if you have a default for less than £500 see this link.

Assume you owe £3,000 to a bank or Credit card or even on a Hire Purchase Agreement. If you miss a series of payments alongside ignoring correspondence from the lender chances are they'll issue a Default against your name after about 3-6 months.

Sadly, this will remain on your file for 6 years and will means that gaining credit, including a mortgage, will be a real struggle.

This 'Default' will show up on your credit file and this is bad news because it ranks right up there with a County Court Judgment (CCJ). People often assume that a CCJ is the worst entry on a credit file (apart obviously from bankruptcy) but in reality most lenders view CCJs and Defaults as one and the same.

Want to improve your credit rating? Consider using a low-limit Credit Card as a strategy of monthly borrowing and repaying. It works wonders. Find out more.
Why a 'Satisfied' Default is no better than a 'Default'
  • Assume you have a Default marked on your credit file and continue to have a problem settling the debt because of lack of money
  • Most companies in this situation will accept a lesser offer, perhaps 60p in the pound (£600 is used to settle a debt of £1,000)
  • If you pay this money in full and final settlement the Default will now be marked 'satisfied'
  • One would now think the matter is over, the default will be removed and your credit file clean
  • Sadly this is not the case as most people don't realise that a satisfied default is viewed as badly as a plain default
How bad is a Default Notice

Very bad and here's an example. You'll struggle to find a normal bank account that will issue you with a chequebook. Although, if you already have one with your current bank they won't take it away.

And as for mortgages (with a competitive interest rate), credit cards and cheap loans, forget them all if you have a default.

How to get a default removed - past paperwork is the key
In some circumstances there is a strategy that people can use to force a lender to remove a default notice. This strategy has legs because many banks and other financial institutions in the past issued Default notices like confetti, without following the strict paperwork guidelines that are in place.

And it's wrong paperwork which is the lever you'll be using to get a Default wiped.

However, there is one problem as the strategy in the paperwork and procedure by the banks has all been tightened in the last couple of years. So if your default was placed on your account before the beginning of 2006 then you've got a far better chance of getting it wiped than if the default was issued in say late 2007.

Whatever the case, we'd still advise you to follow this plan under the 'nothing ventured nothing gained' philosophy

Timescale For The Wiping Default Strategy

The total time should take you no more than a few hours but it will likely take 6+ months before you get a result one way or the other. Not only do the banks seem snowed under with paperwork but they won't like dealing with you (too bad!). We therefore suspect that many letters get 'lost' in the system. But don't worry because -

  1. You'll be sending recorded letters, and
  2. The banks have to reply to your requests by law. If they don't consumers have the power to threaten them which will get action - Don't therefore give up
Some Background
  • What we're going to do is show you a set of letters (both sent and received) that were passed to us by a gentlemen who had a default on his credit file. We will refer to him as Mr One
  • The default was for around £25,000
  • The amount doesn't matter either so this can be tried with a default of just £200 right up to £100,000
  • All account numbers and dates have been marked out
Critical Point - What the strategy relies on

The strategy relies on the fact that a Default warning letter was never sent out.

The law states that before a default can be issued the lender has to send a default warning letter.

This is an official looking letter that offers the customer a final 28 days to settle. The letter also includes details of what a default is, and the effects of one being lodged against your name, ie might struggle to get new credit

If you want to continue then you'll be arguing the default issued against you was done so illegally because the correct paperwork procedure wasn't followed.

In effect you are going to be arguing on a technicality.

1st Step - Get Hold A Copy Of Your Credit File


  • See - How to order your Credit File for £2
  • When you receive it study it closely for the default and any other related information
  • Assume details of the default are then, go on to the next step
Letter Writing
Here is a list of all the letters that Mr One wrote, the replies he received from his bank, as well as our comments.
LETTER 1
Comments
  • Get organised!

  • You're going to be writing at least 3 letters and maybe a lot more so get a new file that you can place all documentation in

  • Good paperwork is important because if you have to take matters beyond the bank to a higher authority you may need to pass your case file on to them

Mr One's Address
23 High Street
London
ABC1 8YZ

The ABC Bank
1 Bank Square
Bank Town
BK1 7TD

Date: xxxxx

Dear Sir or Madam

Account number - xxxxxxxxxx
Sort Code - xxxxxx

After recently obtaining a copy of my credit file from Experian I was concerned to note that your company has placed a "Default" notice against a joint account in my and my wife's name.

Further to this neither I nor my wife have a recollection of ever receiving such a notice, and I therefore require you to substantiate this data at your earliest convenience.

1. You must supply me with a true copy of the alleged agreement you refer to. This is my right under your obligation to supply a copy of the agreement under the legislation contained within s.78 (1) Consumer Credit Act 1974 (s.77 (1) for fixed sum credit). Your obligation also extends to providing a statement of account. I enclose a £1 postal order in payment of the statutory fee, PO Serial Number 1587 716732.

2. You must supply me with a signed true and certified copy of the original default notice

3. Any deed of assignment if the debt was sold on

I would request that this data is provided to myself within the next 28 days, if you are unable to provide this data then I must insist that it is removed from my files as unsubstantiated.

Yours faithfully

Mr & Mrs One

Comments
  • It is important that this letter is sent recorded delivery

  • Also note that £1 was sent in the form of a Postal Order (a photocopy of this postal order should be attached to a copy of your original letter and placed in your file)

  • Note, that all letters are written by Mr & Mrs One because the account was in their dual names. This also meant that a default notice was placed against both their credit files

The ABC Bank's reply to Letter 1

Dear Mr One

We write with reference to your letter dated xxxxx.

We write to confirm that after checking with Experian it shows that when the account was satisfied via a full and final payment the default notice was also marked as satisfied with Experian.

If you have any queries, please do not hesitate to contact us on the number above.

Please find enclosed your postal order for £1.

Yours sincerely

Customer Services Manager

Comments
  • A classic fob-off letter telling Mr One nothing, apart from what he already knew

  • Interesting to note that they try to get Mr One to call them if he needs anymore help

  • NEVER speak to anyone on the telephone even if they call you

  • Politely say that you want ALL correspondence in writing

  • OK, it's time to hit them with letter 2 (you can wait a week if you want but why not write back the same day)
LETTER 2

Dear Sir or Madam

Your Ref : On the last letter from ABC bank there will be a reference number, place it in here
Account number - xxxxxxxx
Sort Code - xxxxxx

Thank you very much for your letter dated xxxxxx.

You however tell both my wife and I information that we already know. We have both seen our Credit References and the notice of 'Default' and then 'Satisfied' next to the item relating to the ABC bank.

It is the 'Default' notice that we are very concerned about because neither I nor my wife have any recollection of ever receiving such a notice.

The three questions in the original letter dated xxxxx (letter 1) specifically relate to this point and request you to substantiate this information. Could you therefore answer in full the questions contained in the xxxxxx (letter 1 date) letter of which we enclose a copy, we also enclose a £1 postal order.

It is your duty to comply with my requests under the law.

Yours faithfully

Mr & Mrs One

Comments
  • As we mentioned above Mr One's default has been 'satisfied' but this does not matter for this strategy

  • Even if the default had not been marked 'satisfied' the letters written would have been the same

  • Make sure you send this letter recorded delivery as well
The ABC Bank's reply to Letter 2

Dear Mr & Mrs One

We write with reference to your letter dated xxxxx (letter 2).

We can confirm that we have requested a copy of the Default Notice and also the account opening form and once this is received we will send these along with statements as requested.

Yours sincerely

Customer Service Manager

Comments
  • OK, now they understand that Mr One cannot be fobbed off and perhaps knows what he's doing so they might be forced to do some work

  • But will they do anything or continue to brush the matter under the carpet hoping that Mr One forgets, or is disorganised?
LETTER 3
Comments
  • Nothing was heard back from the bank for over 28 days which is the normal time limit for this kind of correspondence

  • Mr One therefore puts in a threat in his next letter, in a professional manner of course

Dear Sir or Madam

Your Ref : xxxxxxxxxxxxxxxxxxxxxxxxxxx
Account number - xxxxxxxx
Sort Code - xxxxxx

I wrote to you on the xxxxx (letter 1) and the xxxxx (letter 2) asking for some relevant information. I enclose copies of the two letters which were both sent via recorded delivery.

You wrote back to me on the xxxxxxxx without answering any of the questions put to you in the original letter.

As 28 days has now passed from the date of the 2nd letter you are now in breach of your duties under Section 78 of the Consumer Credit Act. If you do not answer my original questions and reply within 7 days I will have no choice but to escalate the matter to the relevant authorities including the Banking Ombudsman, Office of Fair Trading and the Information Commissioner's Office.

Yours faithfully

Mr & Mrs One

Comments

  • Note the 2nd sentence in the first paragraph 'which were both sent by recorded delivery'

  • Let the bank know that they can't get out of this easily, Mr One is right on their case
The ABC Bank's reply to Letter 3

Dear Mr One

Thank you for taking the time to write to us about your concerns. All concerns are important to us and we welcome the opportunity to address the issues raised.

We are not yet able to answer your concerns fully, as we need to look into matters further. We will contact you again in 10 working days either with a full response or to update you on the progress we have made. However, if you wish to discuss matters, please contact us on telephone xxxx xxxxxx.

Yours sincerely

Mr A Realname

Comments

  • Now Mr One is getting somewhere especially as this letter is signed by a real person and not a 'customer service representative'

  • The bank are now are under no illusion who they're dealing with, ie somebody who knows the right threats to use, in this case a 'breach of your duties under Section 78 of the Consumer Credit Act'

  • Note again that they're trying to get Mr One to telephone rather than put things in writing
Further reply to Letter 3 from the ABC Bank

Dear Mr One

Thank you for your patience whilst we have been addressing your concerns. Whilst we had hoped to be in a position to resolve matters by now, unfortunately, this has not yet been possible due to delays in obtaining the information that we require to complete our review.

Please accept our sincere apologies for the delay. We will contact you again within the next 10 working days with an update or a full response.

Meanwhile, please feel free to contact this office, if you wish to discuss this further on telephone xxxx xxxxxx.

Yours sincerely

Mr A Realname

Comments

  • It's obvious now that Mr One's letters are in the system and logged because they replied within 10 days of their previous letter

  • Again, they subtly try to get Mr One to call with his concerns - fat chance

  • However, after hearing nothing back from them for a week it's time for Mr One to suggest that because they cannot provide the paperwork asked for in letter 1 they should remove the 'default' notice all together
LETTER 4

Dear Mr Realname

Your Ref : xxxxxxxxxxxxxxxxxxxxxxxxxxx

Account number - xxxxxxxx

Sort Code - xxxxxx

Thank you very much for your letter dated xxxxxxx (the one above). However, as you have now exceeded the statutory time for the data provision requested could you please consider removing the data in its entirety as unsubstantiated.

If you do not feel that you are in a position to do this we will have no further option but to refer this case to the Information Commissioner Office, Banking Ombudsman and Trading Standards as appropriate.

Yours sincerely

Mr & Mrs One

Comments

  • No comments apart from there being 3 real threats contained in the last paragraph

  • All of those organisations mentioned will likely take Mr One's side if this matter intensifies further, and the ABC bank knows this

  • As we mentioned earlier on it's all about the correct paperwork and procedure which has to be followed
Reply to letter 4 from ABC Bank

Dear Mr One

Thank you for your patience whilst we have been addressing your concerns. Whilst we had hoped to be in a position to resolve matters by now, unfortunately, this has not yet been possible due to delays in obtaining the information that we require to complete our review.

Please accept our sincere apologies for the delay. We will contact you again within the next 10 working days with an update or a full response.

Meanwhile, please feel free to contact this office, if you wish to discuss this further on telephone xxxx xxxxxx.

Yours sincerely

Mr A Realname

Comments

  • This is just not on, the letter is exactly the same as one received less than 30 days ago!

  • Mr One therefore immediately fires off a response trying to bring the matter to an end

  • He feels that as the paperwork is not forthcoming the odds-on getting the default removed are moving into his favour
LETTER 5

Dear Mr Realname

Your reference xxxxxxxxxxxxx

Thank you letter dated xxxxx which I note it is an exact replica of your letter dated xxxxx. In your most recent letter you have not give me an update or a full response as you stated that you would in your previous letter.

I refer you to the last paragraph of my letter dated xxxxx (letter x) stating that I must refer this case to the information Commissioners office, the Banking Ombudsman and the trading Standards.

Would you please reply to this letter within 10 days giving the details of the data provision previously requested.

Yours sincerely

Mr & Mrs One

Reply to letter 4 from ABC Bank (this came within 3 days of the Letter 5 being sent)

Dear Mr & Mrs One

Ref xxxxxxxxxxxxx

I write regarding the above detailed account and in response to your letters dated xxxxx and xxxxxx. Thank you for your patience while we have been investigating the matters.

Unfortunately, it appears that you did not receive the letter forwarded to you on xxxxx (a copy of which has been enclosed for ease of reference).

I regret to advise you that I have been unable to obtain copies of the original account documentation of the default notice. Consequently, as it appears that the requested documentation has been lost, copies could not be provided within 28 days of your request. Please accept my apologies for any inconvenience this may have caused you.

Since we have been unable to locate a copy of the default notice issued, as an exceptional matter, the necessary action has been taken to delete the adverse data recorded with the credit reference agencies.

Thank you for taking the time and trouble to bring this to the bank's attention.

Yours sincerely

Mr Another Realname

Comments

  • Bingo! Mr One has won the battle and forced the bank to remove the default notice from his credit file

  • About a month later Mr One then requested a new copy of his credit file from Experian to check the default had been removed, it had

  • However, if it had not then the process was likely still in the 'system' and another polite letter to the bank reminding them would be in order
Summary to wiping a Default Notice

Paperwork and procedure is what it's all about when looking to remove a default notice from your credit file. And if they haven't been correctly followed by the Bank in question you've got a good chance of getting a default notice removed.

While we cannot promise anybody reading this with a Default that they will be able to also it removed we would strongly advise that you study the letters in detail and copy the exact procedure.

Good luck in wiping those default notices!

Postscript

The above strategy was no fluke nor did it rely on luck.

Also in our possession are notes about another gentlemen who had 2 default notices on his credit file, one for £15,000 and the other for £1,200. The same strategy was followed as above, and this time a different bank (both defaults were with the same bank) was forced to wipe the larger of the 2 defaults. Unfortunately the default for £1,200 stayed as the bank's paperwork was in order.

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