Defaults and serious credit infringements on your credit report
Both have a negative impact on your credit score, but what's the difference and how long to they stay on your file?
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
If you do not pay off a debt on time, you risk having a default listed on your credit history. If a creditor is unable to contact you and your debt remains unpaid, your default can turn into a serious credit infringement. Both of these have a negative impact on your credit score and can hurt your chances of approval when applying for lines of credit in the future.
You can use this guide to learn more about the differences between defaults and serious credit infringements. Plus, you can pick up some tips to avoid both and keep your financial history in good standing.
Want a better way to check your credit score?
Banks know your credit score, so why shouldn't you? The Finder app updates your score automatically each month and lets you know if it changes. Pop in your phone number below to get your download link.
What is the difference?
Both defaults and serious credit infringements can lower your credit score and decrease your chances of approval when applying for future lines of credit. Find out what each term means, how they're different and how they can impact your financial history below:
What is a default?
A default refers to an overdue debt of $150 or more. It must be overdue for at least 60 days before a creditor can list it as a default. This includes overdue payments to lenders such as telco providers and credit card issuers. Defaults remain on your credit report for five years, even after you've paid the overdue amount. These are considered negative marks which could hurt your credit score and decrease your chance of approval for future lines of credit.
The credit provider must send two separate written notices to your last known address and request payment before they can list the default with a credit reporting bureau. This is why it's important to keep your contact details up to date and inform your credit issuer if they do change.
What is a serious credit infringement?
A default transitions to a serious credit infringement when you fail to pay your overdue debts and your credit provider suspects that you've left your last known address without providing your new contact details. Serious infringements are listed on your credit report if the lender has attempted contact several times and you haven't paid your overdue amount or may contact within six months.
Consumer serious credit infringements stay on your report for seven years. If you pay it, it will revert to a default and remain on your report for five years. However, the evidence of your overdue account and repayment will remain in your credit history. Serious credit infringements can also lower your credit score and send negative signals to potential lenders in the future.
How can I avoid a serious credit infringement or default?
As defaults and serious credit infringements remain on your credit report for years, it's best to avoid them in the first place. Here are some easy tips to remember to dodge a default or credit infringement:
- Update your contact details. If you move house, log in to your online account or contact your credit issuer as soon as possible to update your account details. That way you won't miss any late payment notifications.
- Set up automatic repayments. You can create automatic payments from your debit account to your accounts so that you never miss a payment.
- Discuss financial hardship options. If you have overdue accounts because you're struggling to pay your bills, you can contact your credit card issuer to discuss alternative payment options. This could include extended payment periods or instalments.
What if I already have serious credit infringements? Can I improve my credit history?
If you already have a default or serious credit infringement, you can still adopt money behaviours to improve your score. This includes simple strategies including consolidating multiple debts, reducing your credit limits and making future payments on time.
If you've ordered a copy of your credit report and spotted false defaults or credit infringements, you can contact the credit reporting bureau to request that they're removed. You can also get help from a credit repair agency to have these illegitimate black marks removed from your credit history.
You can see Finder's guide to credit repair for more tips.
Both defaults and serious credit infringements can have a negative impact on your credit score and remain on your report for years. As both can be avoided, make sure to keep your contact details up to date and reach out to your credit issuer if you're struggling to repay your loan.
Lenders know your credit score, so why shouldn't you?
Get your credit score and comprehensive report now!
More guides on Finder
Why did my credit score change?
Your credit score is a reflection of your credit report and financial history, find out what listings could cause it to increase or decrease.
Finder’s RBA Cash Rate Survey: 60% of experts blame BNPL for drop in credit cards
Credit cards are being used less and experts say Buy Now Pay Later services such as Afterpay and Zip are to blame, according to new research from Finder. In this month's Finder RBA Cash Rate Survey™, 39 experts and economists weighed in on future cash rate moves and other issues related to the state of the Australian economy.
Best energy provider in Australia
Learn how to compare energy providers in your state with our free online tool.
How to find out your credit score using GetCreditScore
Get a firmer grasp of your finances with this free tool.
Find out your credit score using Credit Simple
How to find out your credit score using this free tool.
How to read your credit score using Credit Savvy
Follow these tips to get a handle on your credit with this free tool.
How to get your credit score using ClearScore
How to get an accurate snapshot of your credit history with this free tool.
American Express Velocity Business Card
The American Express Velocity Business Card earns points per $1 spent and offers complimentary travel insurance and two complimentary Virgin Australia lounge passes each year.
Afterpay hangover? Beware of impact on home loan approval
Off the back of Christmas spending, a finance expert has warned that your Afterpay habits could negatively impact your home loan application.
ANZ Rewards Platinum Credit Card – Exclusive Offer
The ANZ Rewards Platinum Credit Card offers a competitive rewards program, $0 annual fee for the first year, a $500 gift card, a balance transfer offer and a range of complimentary insurance covers.
Ask an Expert