First thing's first, get a copy of your credit file to see who has registered any defaults and what they were for. You can do this by either ordering a statutory £2 credit report, or signing up for a trial subscription with any of the credit reference agencies.
For the subscriptions, you will have to pay a monthly fee, but you do get a free trial for 30 days in most cases which you can cancel at no cost (this may be subject to change by whichever agency you subscribe to, please check their latest terms & conditions).
Now you need to find out whether your credit agreement is valid. You can do this by sending a Consumer Credit Agreement request.
It is possible that right at this very first hurdle, you could find out for definite whether or not the default was lawfully entered or not.
In order for it to be even necessary to proceed to the next step, the agreement you receive must be valid. Check it against the checklist on the Consumer Credit Agreement thread.
In order for a creditor to store, process and share data (for example with credit reference agencies) relating to you and your account, they must have your permission. In a nutshell, this permission is contained within the consumer credit agreement.
If the agreement is invalid or if no agreement exists, then neither does the permission to store, process and share data relating to you and the account in question, therefore you could demand that all data relating to the account, including defaults and internal data be removed entirely.
Now, assuming that you receive a valid agreement, lets move on to the next step.
You need to write a letter to the creditor questioning the the default. Up until the recent consumer revolt against financial institutions and their disputed practices, default notices were being dished out quite regularly and often without following strict guidelines put in place by regulators. By not following the proper guidelines, defaults entered against you can now be challenged.
So, let's start the ball rolling, we're going to start writing some letters to the creditor.
As ever, remember to keep everything in order.
Print & keep copies of all correspondence.
Send all letters registered post (recorded or special delivery for proof of receipt).
Step 1
With this letter we're going to raise the issue with the creditor and get the ball rolling. This letter asks for copies of notices sent to you by the creditor regarding the default in question.
Click the link below to download the letter.
Letter 1 - Questioning the default notice
Its quite possible that the first response you get to this letter will be a complete fob-off from the creditor. Something like:
Dear consumer,
With reference to your recent letter, I can confirm that a default was issued on DATE for the amount of £XYZ. This default has been marked satisfied as the account has since been settled.
I trust this answers your question.
Yours faithfully
A. Creditor
Step 2
Well, it doesn't answer anything you don't already know from examining your credit file does it? Even if the default has been marked as satisfied, you want to know how & why there is a default there in the first place, which is very bad for your credit file whether or not it is marked satisfied.
So, lets get a little more serious.
Letter 2 - Request for documentation
At this stage, the creditor is firmly against the clock, but may still try to delay or fob you off. It is important that you stick to your timeline as set out in the letter templates.
Step 3
If you have not received the notices requested to substantiate the default in question, its time to write one final letter before action.
Letter 3 - Final letter before action
The responses you receive to these letters will of course vary so start a thread (You Vs Creditor) in the Credit Reference Agencies & Credit Files forum and get help through each step.