An individual’s credit score is extremely important. The contents of a credit file are essential for a creditor to determine a person’s creditworthiness. If a credit report shows poor credit history, creditors may refuse to provide credit to that person.
Your credit history can be unfairly impacted, and defaults can be incorrectly listed for a number of reasons, such as:
- having been forced to leave your house due to domestic violence
- issues of marital separation
- having an unresolved dispute regarding a debt
- having relocated or moved interstate while bills continued to be sent to a previous address
- fraudulent activity
- having suffered from financial hardship
It is imperative that you seek expert advice in relation to credit defaults and other credit related infringements that can appear on a credit report. Our credit repair lawyers can assist with the following credit repair matters:
- paid and unpaid defaults
- serious credit infringements (clear-outs and bankruptcy)
- paid and unpaid judgments
- fraudulent accounts
- excessive credit enquiries
- Late Repayment History (LRH)/Comprehensive Credit Reporting (CCR)
- Complaints to the Australian Financial Complaints Authority (AFCA) (the AFCA investigates complaints regarding credit, finance, or loan products)
- debt negotiation and statute barred debts/defaults
What are Overdue Accounts/Defaults?
“Overdue accounts” and “defaults”, more commonly known as “black marks”, can be listed on your credit report if:
- a payment to a creditor has been overdue for at least 60 days
- the overdue payment is equal to or more than $150
- a notice has been sent to your last known address to let you know about the overdue payment and requesting payment
- a second notice was sent at least 30 days later to let you know that if you don’t make a payment the credit provider intends to disclose the information to a credit reporting body
- the credit provider must wait at least 14 days after issuing the second notice before listing the default
Creditors commonly fail to comply with the notice and other requirements which gives rise to challenge the validity of the default listing under the Privacy Act 1988 and the Privacy (Credit Reporting) Code 2014.
What happens if I’m served with a default judgment?
A default judgment is where a court makes a judgment without a court hearing, and they can have major negative consequences on your financial status if you ignore them. Default judgements are usually issued by the court after a statement of claim seeking the payment of money from a creditor has been issued, and the ‘defendant’ has failed to respond to the claim.
If you fail to comply with a default judgment, the creditor can bring ‘enforcement action’, which means:
- a sheriff can seize and sell your personal property including your house
- the court can order that your debt be deducted from your bank account
- the court can declare you bankrupt or make an order to dissolve your company
If you have been served with a default judgment, you should seek legal advice to discuss your options to ensure you do not compromise your credit record.
Fraudulent accounts
Under consumer credit laws, victims of fraud (including identity fraud) may request a credit reporting body to not include or disclose fraudulent accounts created with their identity in their consumer credit report. If you are a victim of fraud, we strongly recommend you make this request to all credit reporting bodies (in case they keep a consumer credit report on you), who will then place a 21-day ban period on your consumer credit report. You can request to extend the 21-day ban period to allow for further investigation into any fraudulent accounts created through your identity theft.
How can excessive credit enquiries affect my credit score?
When someone applies for a mortgage or credit card, lenders enquire about that person’s financial capacity (known as a ‘hard credit enquiry’) before approving their mortgage or credit card application. Too many hard credit enquiries may imply that someone is in some sort of financial trouble and needs a large amount of credit.
People with frequent hard credit enquiries on their credit report are also known to have a higher chance of declaring bankruptcy than those with very few enquiries.
Every hard enquiry will translate into a 5-10-point reduction on your credit score. Lenders will also view you as high risk when deciding to lend you money or offer credit.
There are ways to avoid hard enquiries while searching for a loan or credit card. You will need to undertake careful research to identify lenders who offer terms that are suitable for your circumstances without making multiple applications. We advise you to make an appointment with one of our experienced lawyers who can help you with this.
Late repayment history/comprehensive credit reporting
Under the positive credit reporting system, if you have made repayments more than 14 days late at any point in the past last two years, a lender will be able to view your history when applying for new credit. A late payment history will have a negative impact on your credit score so it is very important you ensure you make repayments on time for any existing loans that you may have.
On a positive note, just one single missed payment may not be as significant as compared to the past, because it can now be balanced by positive factors such as all the early and timely repayments a person has made. Regardless, repeated missed or late repayments could still damage a person’s credit rating.
How can our credit repair lawyers help?
Credit defaults and default judgments affect about one in four Australians. Our credit repair lawyers have extensive knowledge of the laws in this area and experience in the practical application of these laws and can advocate effectively on your behalf.
Led by partner, Yousif Matti, our Credit Repair Team is well regarded as an expert in the field of credit repair and privacy law matters.
We assist our clients throughout the entire process, from initial negotiations or complaints with a creditor, through to external complaints with the relevant Ombudsman and the AFCA.
If you need assistance, contact one of our lawyers at [email protected] or call 08 8155 5322 for expert legal advice.