What is the difference between a Default and an Overdue Account on your credit rating?
- Why is a default added to your credit history?
- When is a default added to your credit history?
- What if you pay your account?
- What if your DON’T pay your account?
- Can it get any worse?
- What happens AFTER you pay your account?
- How do you remove defaults from your credit file?
Q. What is the difference between a Default and an Overdue Account on your credit rating?
A. About the only real difference is the name – On an Equifax (Formerly Veda Advantage) credit file ordered directly by a consumer, You might see the heading “Overdue Account(s)” but the same listing from a subscriber, you might see it called a “Default”.
Otherwise, you could say it is an overdue account for at least 60 days before it can be listed as a default.
Q. Why is a default added to your credit history?
A. As part of Australia’s negative credit reporting system, your creditors advise the credit reporting bureau’s of any payments overdue by 60 days or more to alert other potential creditors.
Q. When is a default added to your credit history?
A. A default should only be added to your credit file ONLY after it meets several criteria including but not limited to:
1. Your account is 60 days or more in arrears
2. You have been notified of the arrears in the correct format
3. You have been given the opportunity to pay the arrears amount in the correct format
4. You have been sent any notices pertaining to the type of credit arrears and creditor type
Q. What if you pay your account?
A. If you pay your account before the 60 days, you shouldn’t be listed with a payment default
If you pay your account after you have a payment default already listed, it should be updated to a PAID payment default
Q. What if your DON’T pay your account?
A. If you don’t pay your account, your creditor may take additional recovery action, for example:
1. Your account may be sold or assigned to a debt collector
2. Your creditor may commence legal action which could result in the debt being recoverable for up to 15 more years
Q. Can it get any worse?
A. Yes unfortunately, it can get worse. If you have a bad credit rating, you are likely to be refused credit at a time when you need it the most.
1. If your car breaks down, you may not be able to replace it
2. You may be stuck in the rent trap for many more years
3. If you have a mortgage, you may not be able to refinance it for a long time
4. Your creditor can apply to the court to have your wages garnisheed (so you pay the debt before you get paid)
5. Your creditor can apply to have your property seized and sold to go towards paying your debt
Q. What happens AFTER you pay your account?
A. Your credit report will be updated to PAID
Q. How do you remove defaults from your credit file?
A. The only way to remove a default from your credit rating is:
1. Let it mature and ‘drop off’ after 5 years
2. Evidence that the default was placed unlawfully
MyCRA Lawyers can help you discover if your creditor has made mistakes in the way your default listing was placed.
Historically, MyCRA Lawyers has a 91.6% removal resolution success rate – Call MyCRA Lawyers now on 1300-667-218 if you want to improve your chance of having a clean credit rating sooner.