Finance glossary
Default
Also known as: Default notice, Defaulted account
In simple terms
A default is a formal mark that you broke the terms of a credit agreement — usually by falling far enough behind on payments — and it seriously affects your credit file.
On this page
What does default mean?
A default is recorded when you fail to keep to a credit agreement, typically after several missed or reduced payments. The lender issues a default notice and, if it is not resolved, registers a default with the credit reference agencies.
A default is more serious than a single missed payment or being in arrears — it marks the relationship as broken down.
How a default works
For a regulated agreement, the lender must first send a default notice giving you at least 14 days to put things right before taking further action. If you do not, a default is registered and stays on your credit file for six years — even if you later pay the debt.
After a default the debt may be passed or sold to a debt collection agency, and the lender may take court action, which could lead to a County Court Judgment (CCJ).
How could this affect me?
A default makes borrowing harder and more expensive for six years, and can affect some rentals, mobile contracts and even jobs that involve credit checks. Paying it off changes the status to “satisfied” but does not remove it early.
The six-year clock runs from the default date, not from when you pay — so an early, honestly-dated default can actually drop off sooner than one delayed by partial payments.
Things to watch out for
- Paying a default does not remove it — it stays for six years but shows as “satisfied”.
- Making token payments can sometimes delay the default date, keeping it on your file longer.
- Check the default is accurate; you can dispute an incorrect one with the credit reference agency.
Know your rights
- For regulated agreements, a lender must serve a default notice under the Consumer Credit Act 1974 and give you time to remedy the breach before acting.
- You can ask a credit reference agency to correct inaccurate information, and add a “notice of correction” explaining the circumstances.
- Lenders must treat you fairly if you are in financial difficulty (FCA rules).
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- legislation.gov.uk, Consumer Credit Act 1974 — default notices (s.87–88) (opens in a new tab). Accessed 22 Aug 2026.
- Information Commissioner’s Office, Credit reference agencies and default information (opens in a new tab). Accessed 22 Aug 2026.