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Things to know about credit default listings

While we may be able to do long division at the drop of a hat, a lot of us were never taught the basics of personal finance during school. When you don’t know how credit scores work or how to borrow money, it’s easy to make mistakes and damage your financial future.

Today we’re talking about everything you need to know about credit default listings. Keep reading to learn what they are, how they work and how to avoid them.

Defaults will remain on your credit file for five years.

What is a credit default listing?

Simply put, when you leave a debt of $150 or more unpaid and overdue for 60 days, it’s likely that the lender will record a default on your credit report. These defaults, also known as “black marks”, will remain on your credit file for five years.

How do I know if I have a default?

Default listings don’t just appear on your credit report out of nowhere. If you miss a payment there is a process that the provider must follow before listing a default.

  • The first notice can be sent as soon as payment is overdue. Life is chaotic and sometimes things just slip your mind. If you make the payment right after this first notice, it will not be classed as a default.
  • The second notice will be sent a minimum of 30 days after the first notice. If you get a second notice, you need to take action fast! Either make the payment or talk to your creditor to make other arrangements.
  • After a minimum of 14 days from sending the second notice, the creditor can inform a credit reporting body (eg. Equifax) to list the default on your report.

To stay on the safe side we recommend checking your credit report at least once per year to keep an eye on things. Also, if any errors are hurting your score you can catch them quickly.

How can I avoid a credit default listing?

Now that you know what credit default listings are, you probably want to avoid them at all costs, right? Obviously, the best way to avoid default listings is to never miss a payment. But this is easier said than done. To avoid default listings in the future, check out our top four tips.

  • Tip 1: To set yourself up for success you can organise a direct debit or scheduled payment to your creditor. Make sure it’s in line with your payday so that you never get the dreaded “insufficient funds” notice.
  • Tip 2: Make a list of all of your creditors as well as internet, phone and utility providers (in your phone will do). This way, if you move house you know who you need to call to update your address. This should ensure that you don’t miss any first or second notices of missed payments.
  • Tip 3: Keep track of all of your credit commitments and review your budget before making an application.
  • Tip 4: If you’re going through a tough time, get in touch with your creditors ASAP to discuss their hardship options.

What are the impacts?

Why does having a default listing on your credit file matter? Well, the biggest impact is that it is more difficult to get approved for a loan. Potential lenders will see that you were unable to make your repayments in the past. This makes you a bigger risk to lend to.

That’s where Gedda comes in. We specialise in providing loans to good people with bad credit scores. Taking out a loan will not only give you financial freedom, but it will also be an opportunity to showcase positive repayment behaviour. This can give your credit score a boost! Get in touch to learn more about our loan solutions.

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