Everything you need to know about credit default listings
Simply explained – if you leave a bill of $150 or more unpaid and overdue for 60 days, chances are high that you will find a default listing on your credit report.
Many Australians are in the dark as to what a credit default listing is, let alone the subsequent impacts it can bring. To help clear through the uncertainty, we’ve put together some helpful answers to a few common default concerns.
What is a credit default listing?
A credit default listing represents an overdue debt that has not been addressed. A default listing is an example of negative credit history, which will damage your credit score, leaving a default on your file for five years.
For example, an energy bill worth over $150 that was left unpaid for more than 60 days past its due date could potentially be listed on your credit report as a default payment by the energy provider.
How do I know if I have a default?
Providers will take a number of steps to get consumers to pay their bill prior to listing the payment as a credit default.
The first notice can be sent as soon as payment is overdue, informing you of the status and requesting you to pay the overdue amount.
The second notice must be sent a minimum of 30 days after the first, informing you that if you don’t pay the overdue amount, the creditor will issue a notice stating that the full balance is now outstanding and requires payment.
After a minimum of 14 days from sending the second notice, the energy provider can inform a credit reporting body and the default will be listed on your report.
It is not common to be notified once the default listing has occurred. Therefore, to know whether you have a default listing, it can be recommended that you obtain one free credit report per year from each of the three major credit reporting bodies in Australia; Illion, Experian, and Equifax.
What exactly gets listed on my credit report?
Your provider will report the following information to your credit reporting body in relation to your default listing.
- The credit provider’s name and type of account
- The amount listed as a defaulted
- The date the listing is due to be removed from your report (5 years’ time)
Can a default listing be removed from my credit file?
Even if you pay the outstanding amount after the default listing is on your report, the amount can’t be changed to reflect any payments you have made since the default was issued. Instead, the creditor will advise the credit reporting body to have the listing changed to ‘paid’, but this does not necessarily mean that the default has been removed.
Additionally, if you miss a further payment, it can be issued as a separate default listing.
If you believe that a mistake has been made and you have inaccurately been issued a default listing, you have the right to have that listing corrected free of charge. This can happen in the case of inaccurate, out-of-date, incomplete, irrelevant or misleading information. After investigating your complaint with your provider, the credit body can remove the listing.
According to Equifax, other circumstances that can be considered when requesting default listings be removed from your credit file include:
- When a default listed on the consumer portion of your credit report has subsequently become statute barred.
- When there is a default listing and you have entered a new arrangement with the relevant credit provider, and the default listed on the consumer portion of your credit report was the result of unavoidable circumstances such as a natural disaster or bank error.
How can I avoid a credit default listing?
- The easiest and most effective means of avoiding default listings is to pay your bills in full and on time. This can be done by setting up direct debits, or scheduling your repayments regularly in line with your payday.
- Stay on top of the contact details you provide your creditors. Ensure that your address is always up to date when you move to a new house, whether it be for your internet, phone, energy, or television provider. If you accidentally miss a payment, you will receive the first and second notices in time for you to make the arrangements necessary to pay the overdue amount before it becomes default listed.
- Be aware of your credit commitments and only apply for credit when you really need it.
- If you are struggling to make ends meet and it’s affecting your ability to make payments on bills or repayments on loans, your providers will have hardship options available that you can apply for.
What are the impacts?
Credit providers analyse your credit report as a measure of your credit-worthiness to ultimately determine whether you are responsible with credit. Damaged credit files with default listings will be viewed less favourably by many credit providers, as it shows that you have failed to pay off debt in the past, increasing the level of risk associated with you as an applicant.
Basically, you may find it difficult to find credible lenders when in search of credit. That’s where LoanU comes in – we specialise in understanding and rehabilitating damaged credit files with our rate reducer personal loan.
Designed to reward you for good repayments with interest rate decreases, this also acts as an incentive for you to rebuild your credit file and show good credit habits.
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Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or requirements. Therefore, please consider whether the information is appropriate to your circumstance before acting on it and seek independent advice from a finance or legal professional if necessary. All loans are subject to a full application and assessment by United Loan Solutions Pty Ltd trading as LoanU (Australian Credit Licence number 486303). LoanU is part of the PF Group Holdings Pty Ltd group of companies.
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