A default registered in the last 12 months usually has the biggest effect on a remortgage, and many lenders will not consider one this recent. Some specialist lenders may, depending on the amount, the type of account, whether it is settled and how much equity you have. Unlike a CCJ, there is no short window in which paying a default gets it removed, so the default date you have now is the one lenders will see for the next 6 years.
This page covers the first year: checking the default was recorded correctly, what your current lender may offer while it ages and how the picture tends to change month by month. Our main page on remortgaging with defaults explains how defaults are dated and recorded.
On this page
This page covers
- Credit issue
- DefaultsUsually stays on your credit file for 6 years from the default date.
- When it happened
- Registered in the last 12 monthsRecent issues tend to carry the most weight, so the choice of lenders is usually narrower.
Read the main guide: Remortgaging with defaults on your credit file
In short
- A default from the last 12 months usually narrows the choice of lender more than an older one.
- Paying it quickly marks it settled but does not remove it. There is no one-month removal rule as there is for CCJs.
- If your deal is ending, a product transfer with your current lender may not involve the same credit assessment as a new application.
- Check the default is accurate now, while the dates and letters are still easy to find.
Why does a default from the last year weigh so heavily?
Lenders tend to give most weight to recent credit events. A default in the last few months suggests the difficulty behind it may not be over, and there has been little time to build a clean record since. It also usually sits alongside recent missed payments on the same account, so the last year of your file may show several negative entries that all come from one debt.
| Months since the default date | What your file shows | How it may be viewed |
|---|---|---|
| 0 to 3 | A new default, often with late payment markers just before it | Few lenders may consider it. Your explanation and what has changed matter most |
| 3 to 6 | The default, plus a few months of payments on your other accounts | Still limited. A settled status and steady payments since can help |
| 6 to 12 | The default with a growing run of clean months after it | Some specialist lenders may consider it, often at a lower loan to value |
For illustration only. These are general tendencies, not the criteria of any lender.
Your other accounts matter a great deal in this period. Every month of on-time payments since the default adds to a record that sits beside it, and a new late payment now can set that back.
Is the new default correct? Checks to make now
Mistakes are easier to sort out in the first few months, while statements and letters are to hand. You would normally expect to have had arrears letters and a formal warning before the account was closed. Check your free report from each agency for:
- a default date that fits, usually a few months after your first missed payment
- a balance that is right and does not include charges you have already disputed
- an account that is actually yours, not a partner’s account or a case of identity fraud
- any payment arrangement you agreed before the default
- a single entry, even if the debt has already passed to a collection agency
If something is wrong, raise it with the creditor first, then with the credit reference agency, which can add a note to your file while it looks into it. Our guide on correcting errors on your credit file sets out the steps. A default that was recorded correctly cannot be removed just because it is recent.
What can you do if your deal ends before the default ages?
This is the most common worry with a new default. Your options may include:
- A product transfer. Where you are not borrowing more, FCA rules allow your lender to switch you to a new deal without a full affordability assessment. It still decides what to offer, but a recent default on another account may matter less. See product transfers with bad credit.
- The standard variable rate for a while. Usually more expensive each month, but often free of early repayment charges, so you could remortgage later when the default is older.
- A specialist remortgage now. May be possible, particularly with plenty of equity, although rates for adverse credit are often higher than high-street rates.
- A further advance. Borrowing more from your current lender usually means a fresh assessment, so the recent default is likely to be looked at.
Some people use a shorter deal as a bridge, so they can review their options once the default is a year or two old. Check any early repayment charges on the new deal before you commit, and see what happens when a default is 1 to 2 years old.
Should you pay a recent default straight away?
Paying does not remove the default, but it changes the status to settled, which many lenders may view more favourably than a live balance. The trade-off in the first year is usually cash. Emptying savings you might need, or taking out new credit to clear it, can leave you more exposed if the problem that caused the default has not gone away.
If you cannot clear it in one go, an agreed payment plan shows you are dealing with it, although the account stays unsatisfied until it is paid. Our page on unsatisfied defaults explains how lenders may treat that.
If your mortgage payments are also at risk, speak to your lender early. Free, confidential advice is available from MoneyHelper, StepChange and National Debtline before you take on any new borrowing.
What lenders may weigh with a default this recent
| Factor | Why it matters |
|---|---|
| Months since the default date | Even a few extra months can change how a new default is viewed, so the exact date matters. |
| Payments since the default | A clean run on every other account shows the problem has not spread. |
| Status of the default | Whether it is unpaid, on a payment plan or already settled. |
| What the account was | A utility or phone default may be viewed differently from a loan or credit card. |
| Your mortgage record | Keeping your mortgage up to date while another account defaulted can count in your favour. |
| Equity in your home | A lower loan to value gives lenders more room, which matters more when adverse credit is recent. |
| Recent searches | Several applications in a short time leave hard searches that other lenders can see. |
| Affordability | Income against all your commitments, including any repayment plan on the defaulted debt. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- The exact default date and the date of your first missed payment
- Letters from the creditor, including arrears letters and any formal default warning
- What led to the default and what has changed since
- Whether you have paid it, are paying it or have agreed a plan
- Your deal end date and whether your lender has offered a product transfer
- Recent bank statements showing your other commitments being paid
Frequently asked questions
Can I remortgage with a default registered 3 months ago?
It can be possible with some specialist lenders, but options are usually very limited this soon. Equity, the amount, the type of account and your record since all matter. If your deal is ending, a product transfer with your current lender is often worth asking about first.
Will paying a new default within a month get it removed?
No. The one-month rule applies to county court judgments in England, Wales and Northern Ireland, not defaults. A default stays for 6 years from the default date even if you pay it the next day, although paying changes its status to settled.
Should I wait 12 months before applying to remortgage?
Not necessarily. Waiting often widens the choice, but it can mean time on the standard variable rate. It depends on your deal end date, equity, what else is on your file and whether a product transfer is available. An adviser can compare the cost of waiting with acting now.
I was not told my account had defaulted. Is that allowed?
You would normally expect letters warning you before a default is registered. If they went to an old address or you think the default is unfair, complain to the creditor in writing and ask it to review the entry. If that does not resolve it, the Financial Ombudsman Service may be able to help.