What is a credit default?

Question

I am wondering exactly what a credit default is. Would I get one for paying my credit card bill a few days late?

Answer 1

A default is usually when the account is transferred to a debt collection agency. It would normally occur if you have 3 months in arrears. or 3 late payments in a row. 1 payment late wouldn't matter.

Answer 2

Hi
for the situation you have described you would have a late payment recorded.
If you failed to pay this months payment before next mothes payment you would then have a default

As a mortgage broker we have to look at peoples credit files and that is how late payments are registered
defaults etc are numbered IE 1 missed 1 month up to 8-9 these are late payments and can even show when a debt management agreement has been reached.

As another answer suggested it would be good for you to set up a direct debit to pay the minimum amount and pay more as and when you can.

you get late payment also on mobile phone bills and any other bills you have coming in so it is always a good idea to set up either direct debits or enter into monthly payment plans with the providers IE gas company's telephone company's etc

if you don't have a bank account you could set up a scheme with a company called one bill used to be called secure homes
you list your bills and agree a weekly/monthly payment to them and they pay your bills but they do charge for this.
you have to be quite self disciplined and make sure you keep track of what dates the direct debits are going to come out of your account and do not go overdrawn except if you have already spoken to your bank as unauthorised O/D's are a very expensive
way of borrowing

Answer 3

A default is when you fail to make 6 consecutive repayments on a credit agreement.

Paying a card late is a 'missed payment'

Even that adversely effects your credit rating, if you have a few of them.

For safety sake, why not make a minimum payment by direct debit on all your cards and them make additional payments as and when you can and want to.

That way you will never miss a payment and keep your credit rating.

Answer 4

Credit Default: In finance, a default option or credit default option is an option to buy protection (payer option) or sell protection (receiver option) as a credit default swap on a specific reference credit with a specific maturity. The option is usually european, exercisable only at one date in the future at a specific strike price defined as a coupon on the credit default swap.
Credit default options on single credits are extinguished upon default without any cashflows. Therefore buying a payer option is not a good protection against an actual default, only against a rise in the credit spread. However options on credit indices such as iTraxx and iBoxx include any defaulted entities in the intrinsic value of the option when exercised.

Answer 5

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If they stopped contacting you, it means they are ready to take legal action against you. This could result in a judgement, which lasts for 7 years on your credit. Some place will settle for a lesser amount to avoid the court process. Contact them and ask them to send you in writing that they will accept the settlement amount and exhonorate the balance. If they won't accept the plea, get it all payed off ASAP, to prevent the judgement. A good way to build credit is actually either a gas card or jewelery store. I have poor credit, and got an account a store for the necklace that I wanted. The payments are normally low, mine was only $25/mo. Try to find one with alteast 6 mo. no interest. When you pay it off in good standings and no delinquencies, this shows on your credit report as having some form of credit established. Good luck!!

Answer 6

The risk of default is the probality that the borrower will fail to repay the money borrowed. Thus, a credit default is basically a situation when a borrower is unable to repay the credit.

Answer 7

you wouldnt get a default, but they do record if you paid the minimum and if you paid it by the right time, so other companies looking at your credit report and deciding whether to give you credit would see that you had made a late payment, which might, or might not, affect their decision.

Answer 8

yes unfortunately u missed their date 4 payment therfore u have a default

Answer 9

A credi default is when you miss a payment.