Your credit score is something that you should always be aware of. A low credit score can mean that you have a hard time getting approved for a loan, or even getting a job. One thing that can negatively affect your credit score is having a default listed on your report. If you have been struggling to make your payments, but are now able to pay off your debt, you may be wondering if the default will be removed from your credit report.
What is a credit default?
A credit default in Australia refers to an overdue debt that meets specific criteria. For consumer credit, the debt must be at least $150, while for commercial credit, it must be at least $100. Additionally, the payment must be at least 60 days overdue. Before a default can be listed on your credit report, the credit provider must follow a formal process.
Credit defaults can have a significant impact on your credit score, potentially reducing it by up to 350 points in some cases. This can affect your ability to obtain future loans, credit cards, or business applications. Lenders may view applicants with defaults as high-risk, potentially leading to higher interest rates or loan rejections.
It’s important to note that different types of loans may have varying default criteria. For example, a mortgage loan may be considered in default after 30 days of non-payment, while the timeline for personal loans can range from 30 to 90 days depending on the lender. Therefore, managing your debts carefully and avoiding defaults is crucial for maintaining a healthy credit profile in Australia.
Does paying a default remove it?
In short; No it does not.
Paying a credit default does not automatically remove it from your credit report in Australia. When you pay a default, the status of the default may be updated to “paid,” but it will still remain on your credit report for five years from the date it was originally listed.
Updating the status to “paid” may be viewed more favorably by lenders compared to an unpaid default, but it doesn’t erase the default from your credit history. The default continues to impact your credit score during this five-year period, regardless of whether it has been paid or not.
It’s important to note that a default can only be removed from your credit report if it was listed in error. If you believe a default has been incorrectly listed, you have the right to dispute it with the credit reporting agency or the credit provider. However, if the default is accurate and legitimate, it will remain on your report for the full five-year period.
If you consider disputing the default directly with the credit reporting agency or credit provider and fail to get it removed, you cannot engage a credit repair company to assist. Essentially you get one shot at a default removal. Therefore, it is best practice to contact a credit repair company first to determine if it is something that can be removed as it was listed in error.
Can a credit repair company remove the default if it’s paid?
While credit repair companies may offer services to remove defaults, they cannot legally remove accurate defaults simply because they have been paid. Companies like ours at Clear Credit Solutions, charge a one set fee for the service to help you remove any and all negative listings from your credit report with a full refund guarantee.
If you’re considering using a credit repair service, be cautious of companies promising to remove legitimate defaults or not conducting an investigation. Legitimate defaults cannot be removed from your credit report in Australia and paying the default does not increase the chance of removal.
Make sure you understand what we can remove from a credit report for you at Clear Credit Solutions.
If you’re struggling with defaults on your credit report, it’s advisable to focus on improving your overall credit health by making timely payments on your current debts and managing your credit responsibly going forward.
