Loan Defaults

Everyone needs financial help at some point in their life. But if you have a negative credit file, can you still get financial support? Discover how to get a loan when you have defaults.

Loan Defaults

Your credit file tells it all. If you have defaulted on your payments to previous lenders and utility companies, these things will be listed on your credit file. While it is effortless for lenders to place default on your credit file, removing it is entirely a different story. You need to go through the dispute process, by contacting the reporting agency, and the credit bureau just to get that defamatory entry out of your credit file.  Many large telco companies and financing institutions don’t care about your reputation as much as they care about their collection. If you cannot pay them right away, then you may have to bear with the consequence of having your loan default reported on your credit file.

There are financing options for people who are seeking out the right loan despite loan defaults. For example, Wealthy You understands that many financing companies easily put defaults on people’s credit files without giving them ample opportunity to recover financially, pay their dues or contest issue that could have otherwise prevented the recording of the default entry. Some lenders also fail to communicate with their customers properly before putting a mark on their credit report.

Common Types Of Unpaid Defaults

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Lender Defaults

Do you have outstanding defaults to another lender? You may find it difficult to get a loan when you have outstanding defaults to another financier unless you have a valid explanation with pertinent documents to prove it.

Most lenders will want your defaults resolved prior to approving your loan. But, if the amount of the unpaid default is small, lenders may be lenient to you. Still, it is important to prepare some documents that would justify your failure to pay on time. It could be a health emergency or a personal situation that made it difficult for you to settle your loan obligations on the due date. Lenders can show leniency to borrowers who are not naturally neglectful of their debt obligations but were not able to repay the debts for the time being because of uncontrollable or unavoidable situations.

Utility Defaults

How many times have you missed your telecommunication bills? What about electric and water bills? Utility bills and telecommunication bills are common types of unpaid defaults. If you want to get a car loan, business loan or any other type of loan, some banking institutions may require you to resolve these debts first. Some financing institutions may disregard these utility defaults and will not require you to pay them first. But, you may have to prepare yourself for questions about why you have these types of defaults, and you may need to present some financial documents showing your capacity to pay the loan despite existing utility defaults.

Court Judgments Or Writs

Did you fail to settle your loan obligations with a financing company or a collecting agency? Some companies file cases against borrowers in an attempt to recover the amount owed to them. There are also cases like alimony, child support and others that require you to pay a certain sum of money within a definite period of time. Judgment or writ that have become final and executory have to be complied with. Some court judgments may prevent you from getting a loan, especially if you have been declared bankrupt. If your case is still on appeal, you may have to show the lender some documentation that could convince the potential lenders to overlook the default and grant your loan application.

Remedies for Unpaid Defaults

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  1. Get a guarantor. If you want the lenders to grant you the loan despite an unpaid default on your credit, having a guarantor lessens the risk of not being paid back. The lenders can go after your guarantor in case you fail to settle your loan obligations, so having a financially-able guarantor can definitely help. But make sure you don’t put your guarantor at risk of getting defaults for your actions.
  2. Apply for a short-term loan with reasonable interest rates. Not all short-term loans are expensive. In fact, there are low-interest short-term loans designed for people with bad credit. So, even if you have an unpaid default, you still have a chance of getting the loan you need. Just make sure that you enquire about the loan terms by getting a non-obligation credit enquiry. Remember that some loan agreements are deceiving; ask for the exact calculation of the total cost of loan before you sign the contract. Wealthy You can give you a free assessment and the exact figures you are entitled to receive based on your current financial situation.


If you have any more questions or need further assistance, feel free to contact us. We're here to help!

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