When you are unable to make a payment on a loan or credit card, the lender may report this to credit bureaus as a default. A default on your credit file can have a big impact on your ability to borrow money in the future, so it is important to understand how and why this may happen.
The report is intended to reveal your credit score and help you figure out where the problem may lie. The data provided by a credit provider will show up on your credit report, including whether you have made payments on time or missed any payments. Your oldest missed payment has a number (from 0 to 7) assigned to it, indicating how long ago it was made. This information stays on your credit report for two years.
What is a default on a credit file?
A default on a credit report is a listing that shows future creditors or lenders that an account has been opened and not paid. Defaults can arise from a number of circumstances and come from a number of different types of accounts. These accounts can be:
- Personal loans
- Credit cards
- Utility accounts (electricity)
- Telecommunication accounts (phone plans)
- Home loans
- Pay-day lenders (Afterpay, PayPal)
If you make the payment more than 14 days after the due date, you are considered to have missed a payment. It’s important to remember that a credit provider is not required to provide you with a written notification before including a missed payment on your credit report.
A default on your credit report can be recorded by a credit provider if:
- A payment is overdue for at least 60 days.
- The overdue payment is equal to or more than $150.
- At least two written notices have been sent
- 14 days have passed since the second notice, and you haven’t fixed the outstanding payment
- The default is listed within 3 months of the second notice
A credit agency can’t wait more than three months after sending you the second notice to list your default.
If you made the payment after it was designated as a default by the credit provider, your record will show that you paid the debt, but the listing will be updated to reflect this.
How do you check your credit report?
There are a number of ways that you can check your credit file to see if you have a default. Most people are unaware that there are three major credit report bodies in Australia. These are:
- Equifax
- Illion
- Experian
Equifax is the main credit reporting agency in Australia that most creditors and lender will use and check. However, all of these credit reporting bodies have seperate credit reports and it is good practice to check each of them as the information contained on them may be different.
You are entitled to a free credit report every 3 months from each credit reporting body. You can also get an additional free report if you have been refused credit in the past 90 days and/or your credit-related personal information has been corrected.
What to do if you have discovered a default on your credit file.
If you have found yourself in a situation where you have received a default on your credit file, don’t panic. The credit repair team at Clear Credit Solutions is here to help. We specialize in removing defaults, court judgments and fraudulent enquiries from credit files so that you can get back on track with your financial future.
Simply contact the team by filling in our enquiry form or calling the office on 1300 789 783.
