How to clear a default on credit history
Are you surprised your loan application was declined? Are you having trouble taking out a loan? There is a chance that you might have a default listed on your credit file that is impacting you getting that loan.
A consumer credit default is basically an overdue debt that you have not paid back. In Australia, if a debt of $150 or higher that is more than 60 days overdue, is listed on your credit report, it will be called a default. This could be as simple as a missed telephone or power bill.
Your history with managing credit is recorded in your credit file, and it helps lenders in Australia understand your ability to pay back any money you may borrow. Any time you make a late payment or miss one altogether (a default) it will be recorded.
Can I remove a default from my credit file?
The good news is that you can clear a default from your credit file if there’s an error. Unfortunately, if the default is legitimate and there are no grounds for removal you may have to wait up to five years before it clears from your credit history. But don’t worry, there are plenty of other ways to improve your credit history while you wait.
How to remove a default from your credit file
Step 1. Order a copy of your credit file
The first step is to order a copy of your credit file (or report).
Believe it or not, there might be some information in your credit file that is incorrect or false and could possibly hurt your chances of getting a loan. You will have a report with more than one credit reporting agency, so you should check with all three. You can request a free copy of your personal credit file here. If you spot any mistakes, get in contact with the credit reporting agency and have it amended. We recommend checking your credit file every year as incorrect listings can alert you to things like identity theft, where other people use your personal information for financial gain.
You might discover that someone has opened a credit account in your name, either purposefully or an incorrect listing by the credit provider. If they then default you will have to pay it back, otherwise it will leave a black mark on your credit history.
Step 2. Identify any issues and defaults on your credit history
Once you’ve received a copy of your credit file, look for any issues or defaults. This refers to information on your file that may indicate that you’ve had problems repaying your credit including:
⦁ Missed payments
⦁ Overdue accounts or payment defaults
⦁ Clear-outs or serious credit infringements
⦁ Writs and summons
⦁ Court judgements
⦁ Credit enquiries.
If your credit file confuses you, you’re not sure what is says, or if you’d prefer to get it checked by the professionals, the team at Fix Bad Credit offer a free credit file review. Here we will run you through the information on your credit file, explaining simply what everything means, and give you some key tips, tricks and hacks on how to optimise it. If you are interested in this free service click here.
Step 3. Negotiate to remove the default from your credit file
Defaults can only be removed from your file if they’re incorrect or have been incorrectly listed. They remain on your file for 5 years.
The team at Fix Bad Credit use our legal expertise, experience, and knowledge of the legislation, to identify where credit providers have breached their contractual responsibilities in the process of listing defaults. Once we identify the areas where the breaches have occurred, we have the conversation with the creditor that the default was listed incorrectly and request it be removed. As a result, we have an outstanding success rate of negotiating the successful removal of defaults on behalf of everyday Australians, allowing them to get on with living the dream.
Something to consider before attempting to remove your own default from your credit file
When someone has previously negotiated unsuccessfully to clear your defaults it more than often closes loopholes. The opportunities for others to negotiate on your behalf are limited. Even professional and knowledgeable credit repair companies, such as Fix Bad Credit, who have a highly experienced legal team that specialise in these negotiations, will struggle.
Therefore, it is important that you have fully understood the issues in your credit file, have read up on the, in excess of 8000, pages of legislation surrounding credit repair including your consumer credit reporting rights, and are feeling confident with your negotiation skills, before you contact the creditor.
If your credit is not where you want it to be, together we can work to improve it. Contact us for a hassle-free way to clear a default on your credit history.
The information in this article is general in nature as it has been prepared without taking account of your specific objectives, financial situation or needs.