Defaults: what they are and why they matter
A default can be listed when a debt of $150 or more is at least 60 days overdue and the credit provider has sent the required notices. It generally stays on your credit report for five years, even after it's paid, though it's updated to show 'paid'.
To a bank, any default can be an automatic decline. To a specialist lender, the details matter: the amount, the type of creditor, how long ago, whether it's paid and why it happened.
Court judgements
A court judgement is listed when a creditor has taken you to court and won. Judgements are generally kept on your credit report for five years and are seen as more serious than a default because a court was involved.
- Settled judgements with proof of payment open up far more lenders.
- Unsettled judgements usually need to be paid out, often from the new loan at settlement, before a lender will proceed.
- Business-related judgements for directors are common and understood, especially when the business has since closed or recovered.
Late repayments
Since comprehensive credit reporting began, lenders can see two years of your monthly repayment history on home loans, car loans and credit cards. A run of late payments in the last few months worries lenders more than an old default, because it shows what's happening now.
If you're behind on your mortgage right now, read refinancing a mortgage in arrears.
Can I get a listing removed?
If the listing is wrong, yes, and disputing it with the credit reporting body or creditor is free. Common errors include debts that aren't yours, defaults listed without the required notices, and paid debts not updated.
Making your application as strong as possible
- 1
Get all three credit reports
Equifax, Experian and illion can each hold different information.
- 2
Pay or arrange to pay what you can
Paid listings are judged far more kindly.
- 3
Write a short explanation
What happened, when, and what's different now.
- 4
Keep a clean run
Every on-time payment from here helps.
- 5
Apply once, with the right lender
We find the lender whose rules fit your file before anything is lodged.
Defaults from buy now pay later, telcos and utilities
Many of the defaults we see come from small accounts that slipped through the cracks during a move or a stressful period: a final phone bill sent to an old address, an energy account, or a buy now pay later instalment. Specialist lenders are often relaxed about small, paid defaults from these sources, particularly if your other accounts have been managed well.
Judgements for business owners
Company directors and sole traders sometimes carry judgements from a business that failed or a dispute with a supplier. If the judgement was against your company rather than you personally, it may not appear on your personal credit file at all, but director-related listings can. Bring the paperwork showing the outcome, whether it's settled, and how the business stands now.
A worked example
A couple want to refinance. One partner has a $1,800 telco default from three years ago, paid last year, and a court judgement from a 2022 tradesman dispute, settled with a letter to prove it. Their repayments on the current mortgage have been on time for two years and they have good equity.
A bank's automated system declines because of the judgement. A specialist lender, reading the file, sees two old, settled problems and two years of clean mortgage repayments, and approves at a modest risk loading.
What you’ll need
- Photo ID
- Credit reports from all three bureaus
- Proof of payment for defaults or judgements
- A short explanation letter
- Income evidence
- Bank statements
- Loan statements if refinancing
Who it usually suits
- Defaults or judgements explained
- Ideally paid or under a payment plan
- Income that supports the loan
- A deposit or equity
- Recent clean repayment history
