Meaning of a Credit Default
Most people find it hard to even know how credit default stay on there credit file.
Credit default is caused by debt on credit cards, loans or mortgages. Credit default can be said to be a mark in the credit history that marks where there is an unpaid bill or debt. The most notable example of a black mark on your credit history is a creditor listing a default against you.
Definition of default on my credit file
If you have an overdue debt for over 60 days or it is going to leave a default on your credit report. A default is defined as a negative crediting list that can affect the credit score. If the default is less than $150 or if it has been overdue for less than 60 days, it can’t be listed on your credit file. This doesn’t apply to commercial credit reports, where the minimum default amount is $100.
Here are some common types of default in your credit file
- Utility bills
- Loan repayment
- Phone Carrier bills
- Credit card repayment
- Mortgage repayment
The refusal to pay this kind of bill would result in a default in your credit file. Moreover, the bank, lender, phone carrier, credit card provider must have a reasonable proof that they have tried to contact you and must have given you enough time to settle the payment(s).
Meaning of a Credit History
Credit history is a very important aspect of the credit file because it is what keeps track and history of where credit facilities such as loans, credit cards, and mortgages are concerned. Meanwhile, defaults in credit history stay there for 5 years (note: Even if you pay your default it will still be in your history but It will be listed as “paid”)
However, there is another serious credit infringement that can stay in the credit history for 7 years. For example;
- Hacking of credit card funds etc.
The five years rule on credit file history is just for minor credit infringement. The two notable exceptions are:
- CourtWrits: These are documents or order from a higher court or set of people back up by the government to take some kind of action. This stays up to 4 years on a credit history
- Clearout: This can be defined as a serious credit infringement where a person owes a debt to a credit provider but has left, with no traceable address without paying the credit provider and didn’t leave any information about the new address. This is a very serious type of credit infringement, it stays up to 7 years in credit history.
Though some people still wonder if they could get credit infringement off there credit history:
Yes, it is possible if you can prove that the default or credit infringement was listed in error and if you have a soundproof that the creditors didn’t make any effort to contact you. These are the only ways to get default or credit infringement off your credit history.
Most credit agencies are always known to investigate issues like this, moreover unless the creditor has shown negligence; the default or credit infringement would remain the history for the full term. Getting a default or credit infringement doesn’t stop you from getting finance as long the default has been paid.
Can Credit providers list a default automatically after 60 days?
It is not possible for a credit provider to place a default after 60 days without following the process to have a default listed on your credit file. The creditor must have sent at least 2 notices to you either through your email or home address. This is what you can expect from the notices;
- The first notice: You are going to get a notice from the creditor telling you that your payment is overdue and you will be requested to pay your overdue bill. This is the first notice you will be getting from the creditor. Moreover, you are going to receive this notice as soon as the default becomes overdue.
- The second notice: This is where you will be informed that if you don’t pay your overdue bill, the credit provider would be informing the credit reporting body which will end up in default if you ignore this notice. (Note: The creditor needs to wait for at least 30 days to send this notice after sending the first notice.) You will be given 14 days to respond to the second notice before the default is listed on your report.
The creditor will list the following to your information on your credit file in relation to your default:
- The creditor will make sure details and type of the account is stated completely
- The date in which the listing is due will be stated in your report.
- The amount listed as a default in your credit file.
Moreso, the moment in which a default is listed the amount can’t be changed to reflect recent payments or missed payments. So in case you miss a payment, it will be listed as a separate default.
Meanwhile, the listing will be updated to show the necessary accruing interest and fees. So after the interest and fees are fully paid the creditor would contact the credit reporting body and the listing would be updated as “paid”.
As said earlier the credit provider should be able to contact you so it won’t lead to serious credit infringement which would take up to seven years. But if you pay the overdue amount with the interest it will be reverted to a default listing where it will remain on your credit file for 5 years. But it is really important for you to make reasonable contact with the credit provider and update them on your new residential address and information about yourself.
There is always an improvement in your credit score and as soon as default is removed if there are no more serious remarks. You should understand the fact that if you remove a default from your credit file doesn’t won’t make more difference you are having more defaults on your credit file. All the defaults must have been removed on your credit file before you start seeing improvement in your credit score.