A default is a status that is applied to your account when you have breached the terms of your agreement, resulting in its cancellation.
If you miss payments, or if you do not pay the right amount for several months, and it is unlikely you will be able to get back on track, your agreement will be at risk of defaulting. You may be sent a default notice, also known as a notice of default. If the default is applied, it’ll be recorded in your credit file and can affect your credit rating.
A default on your account shows that you’ve not kept up to date with the agreed payments. If you apply for credit in the future, creditors are likely to see this information. They’ll usually assume that the default means there’s a higher risk of you not paying them back.
As a result it may be harder for you to take out products like a new loan or credit card, or open certain bank accounts. You may also find it difficult to get a new mortgage.
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