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Ask the Expert: I’ve found a Default on my credit file I wasn’t aware of, will it stop me getting a mortgage?

Published: 03 October 2017
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Author: Carl Shave - CEO and co-founder
Last updated: 30May2024

Sometimes people only find out about credit issues on their credit file when they apply for a mortgage. How do you handle it if it happens to you?

We recently received the following question via the website:

“I am just going through the process of selling my property and looking at obtaining a new mortgage on a new property. I have just reviewed my personal credit file, which has a default of which I wasn’t aware. In 2011–2014 I had a personal banking account which I stopped using in early 2014.

I left the account with £0.00 balance but, unknown to me, I had banking charges from the previous month which sent me overdrawn and have now accrued additional charges. I have discussed this with my bank and cleared any arrears. This has left me with a really poor credit on Experian, which I would have thought is going to prevent me and my partner from getting a new mortgage. Can somebody please advise?”

First of all, the person asking the question began the mortgage process absolutely correctly – they got copies of their credit report. It is much better to find out about an issue like this by conducting your own checks. It’s much more difficult learning about it as a result of having your mortgage application declined. It can also be advisable to request information from all three main UK credit reference agencies:

They can each hold different information about you.

What to do if you find something on your credit file you were unaware of

If you do find something you were unaware of in your report, you will deal with it differently depending on whether the information is inaccurate or accurate. If it is inaccurate, then write to the agency concerned to get it changed or removed. Check it has been done by requesting a fresh copy of your report afterwards.

If it is accurate, then consider paying off any outstanding balance, if that is possible. A default that is paid off is likely to be seen in a more positive light than an unpaid one. However, it will remain on your record even after payment. It will still remain visible for six years from the date it was registered.

Paying it off, however, may not be the best course of action. It may also not be the best use of your funds. Check with your mortgage advisor before making any decisions.

Steps to improving your credit score:

If you are left with a less than perfect credit score, there are steps you can take to improve it, including:

  •  Ensure that the personal information stored by each agency is accurate. If it is not, contact the agency to have it corrected.
  • Make sure you are registered on the electoral roll and that this shows on your credit file.
  • Manage your credit cards – stay within the agreed limits, pay them on time and aim to reduce the outstanding balance.
  • Cancel any lines of credit that you do not use; for example, store cards or a ‘just in case’ credit card.

For more suggestions as to how you can repair your credit rating, check out our guide.

Please remember, though, that having an imperfect credit score does not mean you will not be able to get a mortgage. High street mortgage lenders tend to have a knee-jerk reaction to adverse credit events, where default means no mortgage. A small default like this occurring three years ago does not have to mean the end of your plans.

There are many lenders who will consider each case on its own merits and be much more helpful. (You might be asked to put down a slightly larger deposit, however, so be prepared for that.)

Check your eligibility for a mortgage with defaults on your file

When they occurred and the amounts of your defaults will contribute towards your chances of success. Checking all the different lenders’ criteria for this can be extremely time-consuming. Our bad credit calculator takes away this burden. By entering a few details, you can find out what your chances of success may be.

Try our Bad Credit Mortgage Calculator

How we can help

Do you have any worries about obtaining a mortgage with defaults or a less-than-ideal credit score? If so, contact Just Mortgage Brokers. Our team of specialist mortgage brokers know exactly who to speak to.

We use our network of lenders to find a mortgage to suit the particular needs of each and every client. Regardless of their credit history. Get in touch today for free initial advice and no-obligation quotes.

Key takeaways, getting a mortgage with a default on your file:

  1. Get copies of your credit report and review them.
  2. If you find something unexpected on your file that is:
    a. Inaccurate, write to the agency.
    b. Accurate, consider paying off the balance.
  3. Take steps to improve your credit score.
  4. Speak to a Mortgage Advisor.