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The difference between defaults and serious credit infringements

Defaults and serious credit infringements have a negative effect on your credit score. Learn the difference between the two and how to avoid both to keep your credit record clean.

Credit scores are used to assess someone's suitability for a loan. A poor credit score can make it difficult for you to get a loan.

If you do not pay off a debt, you risk having a default listed on your credit history. Defaults can turn into serious credit infringements if the creditor is unable to make contact with you and your debt remains unpaid.

Find out more about these two listings so you can avoid having them recorded on your credit report.

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What is a serious credit infringement?

A serious credit infringement is when you appear, intentionally or not, to be running away or hiding from a creditor. If you have overdue debts and have left, or appear to have left, your last known address without providing a new address, the creditor can report you for serious credit infringement.

In the case of a business, this is called a commercial credit clearout. Your creditor can list a commercial credit clearout against you if you have a debt and have left your last known address without providing a forwarding address.

How is a serious credit infringement different from a default?

A default is simply an overdue debt. The debt has to be worth more than $150 and more than 60 days overdue before a creditor can list it as a default.

A serious credit infringement is really an unmanaged default. It occurs when a default has occurred and the creditor cannot find you to rectify the situation. A serious credit infringement has a greater impact on your credit score than a default. Creditors may be reluctant to loan money to someone who has a serious credit infringement on their credit history.

How long do they remain on my report?

Defaults remain on your credit history for five years from the date they are listed. Serious credit infringements remain on your credit history for seven years, unless they are paid off, after which they revert back to a default and remain for five years.

Commercial credit clearouts remain on your credit report for seven years, even if you pay off the debt. The fact that an amount has become overdue and then been paid becomes part of your credit history, regardless of whether it was a default or serious credit infringement.

How does a serious credit infringement get listed on my file?

A serious credit infringement can only be listed on your credit record after it has been listed as a default. To list a default, the creditor must send two written notices; the first stating that an amount is overdue, and the second warning stating that the creditor is going to report your debt to a credit reporting body. The debt must also be worth more than $150.

Once a debt has been listed as a default, the creditor must make multiple attempts to contact you over the next six months. If you are not contactable and no longer live at your last known address, then the creditor may report your debt to a credit reporting body.

A creditor can list commercial credit clearouts immediately if you have left your last known address and not provided a new one.

How can I avoid a serious credit infringement or default?

To avoid a negative credit record, simply pay all debts and bills on time. There are circumstances in which you may not be able to meet all of your obligations or simply forget a bill. In these instances, communication is key. Talk to the creditor before a default occurs to discuss their financial hardship provisions.

Avoiding serious credit infringement is also about maintaining communication with creditors. Keeping your address up to date is a simple way of preventing a serious credit infringement from being recorded.

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6 Responses

  1. Default Gravatar
    FrankJuly 21, 2018

    I have a credit score which says Fair..is that good or not.and also a default of $150 but I can’t remember where to pay so i can have a clean default

    • finder Customer Care
      JoanneJuly 21, 2018Staff

      Hi Frank,

      Thanks for reaching out.

      Generally a fair credit score would mean having an average score that is neither good or bad. There are ways to continuously improve your credit score for you to get a good to excellent score. Checking this guide will take you through what affects your score, what your Experian credit score means and a few ways to improve it.

      Your credit file should enlist the number of defaults, company you defaulted on, type of account, etc. The credit provider will list the following information on your credit file in relation to your default:

      *The credit provider and the type of account it was
      *The amount listed as a default
      *The date the listing is due to come off your report

      This guide will take you through what type of accounts you can default on, the different types of defaults that exist, how default listings can change on your file and everything else you need to know about these listings in this guide.

      Cheers,
      Joanne

  2. Default Gravatar
    KimJuly 17, 2018

    I have done a credit score. And has come up weak. I have had a phone bill in my name along time ago, which has since been paid for in full on the 2.7.2018. I am trying to buy a new car and find myself jumping through hoops because of this debt. What is my next step for help please.

  3. Default Gravatar
    sally-annJanuary 18, 2017

    my score is much worst than i thought,i don’t have any bills i haven’t paid,but i am late paying sometimes could this be why??

    • finder Customer Care
      LouJanuary 18, 2017Staff

      Hi Sawatson,

      Thanks for your question.

      There are different factors that can affect your credit score. For more information on this, you can refer to our guide here.

      If you’d like to know the full details of your credit score, you can request a free credit report from Veda through this page.

      Cheers,
      Anndy

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