What are Credit Defaults?
Credit Defaults are the result of non-payment of a credit account, where your creditor has either:
- Reported non-payment or default to a credit reporting agency.
- Sold your debt to a debt collector, who in turn has made the report to the credit reporting agency.
The two most common credit reporting agencies are Veda which has now been sold to Equifax; and Dunn and Bradstreet.
There are a number of policies a creditor must meet in order to lodge a credit default against your credit file.
- Consumer Credit defaults can be lodged for amounts greater than $150
- Commercial credit defaults can be lodged for amounts greater than $100.
- 60 days or more have passed since the due date of payment.
- A confirmed missing debtor where they can’t find you. This would be listed as a clear-out.
- The creditor needs to have made due effort to notify you or has asked you to make the payment via a phone call, letter or in person.
The creditor must also provide you notice that you may receive credit defaults for the non-payment prior to the default being listed.
Credit defaults will be listed on your credit file for a period of 5 years, unless unpaid, in some circumstances can stay for 7 years.
Confusion with Credit Defaults
If you pay the debt back after the default is listed, the credit default would be updated as paid but remain on your credit file. Credit Defaults will not be removed. There may have been some confusion in regard to paying and clearing your default, which may have been a misrepresentation by a debt collector in their endeavours to obtain your money. Please note your creditor won’t usually remove a default once it is paid unless they acknowledge they have listed the default in error by not following the above guidelines.
Mortgages With Credit Defaults
You can still get a mortgage with credit defaults against your name. There are finance options to consolidate your arrears, good and bad debts, defaults, credit judgements and more. If you are after a new mortgage than more than likely you will need to apply for a bad credit loan and also prove your current financial position is suitable for a loan. If you already have a mortgage and are struggling with debts, then a debt consolidation home loan may be the option to make things easier for you.
Where brokers may be bound by traditional lending policies, we think outside the square to legally get you the loan you need to get you back on track.
If you are stressed out with debt, let’s start a discussion about your tailored solution.
Contact us today for a Free Debt Assessment Consultation on 1300 796 850 or submit an enquiry below.