Last reviewed: June 2026
TL;DR- A default is a formal record on the credit file that a borrower failed to repay a debt as agreed - it remains on the file for six years.
- Satisfied defaults (fully repaid) are treated more favourably than unsatisfied defaults by specialist lenders.
- The recency, value and number of defaults significantly affect lender eligibility - older and smaller defaults are more manageable.
- Mainstream lenders typically decline applications with defaults; specialist adverse credit lenders assess on a case-by-case basis.
What Is a Default?
A default is a formal record registered on a credit file when a borrower fails to make payments on a credit agreement and the lender decides the relationship has broken down - typically after three to six missed payments. The lender is required to send a default notice under the Consumer Credit Act 1974 before registering a default. The default remains on the credit file for six years from the date it was registered, regardless of whether the debt is subsequently repaid.
A default is distinct from a missed or late payment, which is a less severe adverse credit event. Multiple missed payments typically lead to a default being registered if the situation is not resolved. A county court judgment (CCJ) may follow a default if the creditor takes legal action to recover the debt.
Satisfied vs Unsatisfied Defaults
A satisfied default is one where the outstanding debt has been repaid in full after the default was registered. The default mark remains on the credit file for six years but is updated to show it has been satisfied. Most specialist adverse credit lenders treat satisfied defaults more favourably than unsatisfied defaults, because repayment demonstrates the borrower has taken responsibility for the debt.
An unsatisfied default means the debt remains outstanding. This is the more serious position and restricts lender choice more significantly. Some specialist lenders will not consider applications where any default remains unsatisfied above a minimum threshold.
How Lenders Assess Defaults
Specialist adverse credit lenders assess default applications by considering:
- The number of defaults on the file.
- The total value of defaulted debts.
- Whether defaults are satisfied or unsatisfied.
- The date the default was registered - older defaults carry less weight.
- The type of debt defaulted on - a mortgage default is treated more seriously than a default on a mobile phone contract.
- The reason for the default and the rest of the application context.
Some specialist lenders have specific eligibility matrices: for example, accepting satisfied defaults of any age and value, unsatisfied defaults only if below a certain value and registered more than a certain number of years ago. These criteria vary by lender and change with market conditions.
Deposit Requirements
Borrowers with defaults on their file typically need larger deposits than standard market requirements. A deposit of 15-25% is common for applications with recent or significant defaults. The required deposit reduces as defaults age and are satisfied. A whole-of-market specialist broker can advise on which lender criteria the borrower's specific default profile meets at various LTV levels.
Frequently Asked Questions
How long after a default can I get a mainstream mortgage?
Most mainstream lenders require a clean credit file with no defaults, meaning the default must have dropped off the credit file (after six years from registration) before they will consider an application. Some specialist lenders consider applications with defaults registered two to three years ago, provided they are satisfied. The specific time requirements vary by lender and the nature of the default.
Can I get a mortgage if the default is for a small amount?
Some specialist lenders have minimum default value thresholds below which defaults are treated as less significant. A default for a small amount - for example, on a utility bill - may be overlooked by some lenders in the context of an otherwise strong application. The specific thresholds vary by lender. A specialist broker can advise which lenders have the most flexible approach to low-value defaults.
Does paying off a default remove it from my credit file?
No. Paying off the defaulted debt satisfies the default but does not remove it from the credit file. The default mark remains for six years from the original registration date, updated to show it is satisfied. The only way for a default to be removed before six years is if it was registered in error, in which case the creditor or credit reference agency can be asked to correct the record.
Do defaults affect my mortgage interest rate?
Yes. Borrowers with defaults on their credit file pay higher mortgage interest rates than those with clean credit histories. The rate premium reflects the higher risk the lender accepts. As defaults age and the credit position improves, remortgaging to a lower rate - either with a specialist lender or eventually with a mainstream lender once the defaults have dropped off the file - typically becomes possible.
