You can only have a default removed if it was listed in error. A default will remain on a credit report for five years.
If a default is paid, the status will be updated to ‘paid’ however it cannot be removed.
Commercial credit defaults stay on your credit report for five years even when you have paid the overdue amount.
The status of the default is updated to paid which can be looked upon more favourably by lenders, but it will remain as part of your credit history.
A commercial credit default is an overdue debt of $100 or more that has exceeded the agreed payment date.
Before listing commercial defaults or overdue debts, commercial credit providers or their agents must send a notice to your last known address stating their intention to list the default amount with a credit reporting body such as Equifax.
Businesses and individuals may not think twice about the impact of a court judgment against them. However, a court judgment may be an issue when applying for a loan, a credit card or even a line of credit with a supplier. Being rejected for credit may mean that your plans to renovate your house or expand your business have come to a grinding halt.
Contents of Your Credit Report
When you submit a credit application, businesses or financial institutions typically check your credit history through a credit reporting agency. The information in the report influences whether they grant the application.
Your credit report contains a history of your:
- repayments (for example, on loans).
- overdue accounts.
- writs and summons.
- court judgments.
Remove a Judgment From Your Credit Report
While some credit reporting agencies may remove a judgment if you provide evidence of the repayment of a debt, credit agencies such as Equifax will not. Unless the judgment on your report is incorrect, it is challenging to remove a judgment before its automatic removal. Depending on the type of judgment, the automatic removal date ranges from two to seven years.
A judgment remains on an Equifax credit report for five years, whether you pay the outstanding amount. Upon notifying Equifax of your payment of the debt, they add a notation to the judgment. Unfortunately for you, the notation is not helpful when it comes to obtaining credit.
However, the judgment is considered incorrect and thus removed if:
- whoever obtained the judgment (the judgment creditor) agrees to set it aside; or
- a court sets aside a default judgment.
What is a serious credit infringement?
The term serious credit infringement relates to consumer overdue debts where an individual owes a debt to a credit provider but has left or appears to have left their last known address without paying that debt and without providing the credit provider with their new or forwarding address. A serious credit infringement can be listed on a credit report in this case if the individual has not had contact with the credit provider for six months or more despite attempts by the credit provider to contact them.
Consumer serious credit infringements remain on a credit report for seven years from the date they’re listed. However, if they have been paid, they revert to a default and will remain on the report for five years. The fact that an amount has become overdue and then been paid becomes part of your credit history.
In the case of commercial credit clearouts, if you can’t be contacted and it appears to the credit provider that you have left your last known address and you have not provided the credit provider with a forwarding address, they can immediately list the debt on your report as a clearout, even it hasn’t been overdue for 60 days or more. These commercial clearouts will remain on your credit report for seven years regardless of whether they are paid or not.