A guide to defaults and default notices
You may struggle with poor credit due to circumstances outside of your control. Missed payments and defaults on your credit file can cause a bad credit rating, which can make it difficult to lease a car.
Here we take a look at the difference between defaults and default notices and how they affect your ability to secure a great car leasing deal.
What is a default?
Missed or late debt repayments show in your credit file. A ‘1’ marker on your credit report indicates that a payment on that account is up to one month late. If you miss a second payment, a ‘2’ marker will be recorded on your file and so forth. After missing consecutive rentals for an extended period, your lender may choose to record a default against your account. However, a default on your account is not the same as being served a default notice.
“If you feel a default is unfair or unjustified you can ask the lender to remove it from your credit file.”
What is a default notice?
A lender may issue a default notice after three to six months of missed rentals. A default notice acts as a cautionary letter, warning that your account is in arrears and giving details as to how you can resolve the situation.
By missing rentals, you break the original credit agreement you made with your lender. This means the lender can ask you to pay the balance in full, which you will likely be unable to do.
You should be given two weeks to satisfy the terms of the default notice, allowing you time to bring your account up to date. However, if you fail to do so the default will be recorded as a figure ‘8’ in your credit report. This remains on your file for six years and can seriously harm your ability to secure credit.
Can I remove a default from my credit report?
If you feel a default on your credit report is unfair, unjustified or incorrect, you can ask your lender to remove it. If your creditor refuses to remove the default, you can contact the Financial Ombudsman Service who will investigate the matter on your behalf. Unfortunately, if the default is deemed to be correct and justified, you will not be able to remove it from your file.
It is important to remember that defaults only remain on your credit file for six years, so it is entirely possible to repair your credit history over time.
“If you are struggling with poor credit, you may still be able to lease a car with Eureka. Contact us to see how we can help.”
How do defaults affect my car leasing application?
A default on your credit report can make it extremely difficult to lease a car, as it may indicate a struggle to keep up with rentals. However, as time goes by, lenders are usually less interested in the missed rentals, giving more attention to defaults occurring in the last 12 months.
If you have been refused car finance because of defaults on your credit report, we may be able to help. At Eureka, we realise that circumstances change and want to help rebuild your credit rating. Browse our range of cars to find a model that suits your lifestyle and budget, or complete our simple application form now.