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Small Defaults (under £500)

A strategy to try and remove them

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Page Summary:
Removing a Default from a Credit File is not easy but it's not impossible either. This page looks at a strategy to try to get a small default of under £500 removed.
Common sense would suggest that a Default of £500 is not as bad as one for £5,000.

But the lunacies of credit files, or rather how a potential lender reads a credit file, mean that a £500 default is as bad as one for £5,000 or even £10,000. Unfortunately it's the appearance of the word 'default' on a credit file that does the damage not necessarily the monetary amount.

However, I have seen people enjoy more success in trying to have defaults of less than £500 removed than for larger amounts by using what is the so-called 'sympathy strategy'.
The 'Sympathy strategy' - What is it - How it works
A Default remains on your Credit File for 6 years and that's a long time in financial purgatory for a debt of less than £500. And it's especially so for a default of less than £100, which disgracefully many companies have issued in the past. The lowest I've heard of is £0.39 issued by the Alliance & Leicester, and no that's not a mis-type.

The sympathy strategy as its name suggests works like this -

  • Write to the company who issued the Default and politely ask for it to be removed as -
  • a) it's for such a small amount, and
  • b) as a gesture of goodwill
  • In the letter the person explains the consequences of the default (no credit, no mortgage) and how it is financially affecting them, ie ruining their life
  • If I were writing the letter these are some of the points I'd try to get across -
  • The default is for a relatively small amount and the penalty lasts for a full 6 years
  • It's affecting your life and that of your family
  • You've learned your lesson and have turned over a new (financial leaf) and are now disciplined with your finances
  • So as a gesture of goodwill could it please be removed

Other points to bear in mind

  • Find out the name of the head of the Customer Services Department

  • Make sure the letter is written on a single page, make it as concise and professional looking as possible - but no fawning or gushing

  • If you receive a negative reply don't give up, reply to that person (with thanks) and reword your original letter, perhaps arguing on another point - again the worst they can say is no

  • If that doesn't work I'd write another letter but send it to the Company Secretary (you will be able to find this information on the internet, or call up head office) and see what happens

  • If the Company Secretary replies with a no, write again (thanking them for their previous letter) and argue on another point (as above)

  • If that doesn't work head to the top and write to the CEO (Chief Executive Officer), if you get a non-favourable reply, write again using another angle etc

  • And if all of that doesn't work then I think you've exhausted every available opportunity so use this emergency credit repair strategy as it's very effective
LearnMoney comment:
For some readers the above might seem like a drag, possibly writing 6 letters with no guarantee of getting a result. True, the strategy might not work but what's the alternative - doing nothing and the default stays with you for a full 6 years. You therefore have nothing to lose, no downside and only upside.

The above strategy also relies on persistence. The common ground for most people I've been in contact with over the last few years who've managed to get a default removed is they never give up. If one angle fails they'll try another and then another etc.

Good luck and I really hope you can get some success. But if you can't and have exhausted every possible angle then use the emergency credit building techniques explained in this article.

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