Defaults vs Serious Credit Infringements – Complete Guide

Nov 25, 2022

Defaults and serious credit infringements both harm your credit history, signaling to lenders past financial struggles. Their presence on your credit report can hinder loan approvals, affect interest rates, and impact certain background checks. Both can impact your financial health but they are not the same.

We aim to present this information straightforwardly, making it easy for you to grasp these concepts and their implications on your credit history.

What is a default?

A default simply means that you failed to repay your due bill or loan installment. Defaults can hurt your credit score and are reported on your credit report as well.

Legally, a default can only be listed on your credit report if it meets the following three conditions:

  • The unpaid amount must be at least $150.
  • The unpaid amount must be overdue by at least 60 days.
  • The credit provider or lender must have sent you two written notices for paying the overdue amount. The first notice is sent as a reminder to repay the overdue amount, while the second notice is sent as a warning for listing a default in your credit report if you don’t pay the overdue amount. The two notices can’t be sent simultaneously as there must be a gap of at least thirty days between them.

Additional Info:

  • Grace period: After the second notice, there is typically a 14-day grace period before the default can be listed. This gives you time to catch up on the payment and avoid the listing.
  • Exemptions: Not all types of debt are reported to credit bureaus, and some specialized lenders may have different reporting practices.
  • Credit reporting bodies: There are multiple credit reporting bodies in Australia, not just one “bureau.”
  • Dispute process: You have the right to dispute any inaccurate or outdated information on your credit report.

The following things can happen if you end up with a default:

  • Difficulty Obtaining Credit: Lenders may be hesitant to approve new credit applications, making it challenging to secure loans, credit cards, or mortgages.
  • Higher Interest Rates: If you do manage to obtain credit, you may face higher interest rates due to the perceived risk associated with your default.
  • Negative Credit Score: Defaults can significantly lower your credit score, making it harder to qualify for financial products in the future.
  • Limited Rental Options: Landlords may reject rental applications, affecting your housing options.
  • Employment Implications: Some employers may check credit histories as part of their hiring process, potentially impacting job prospects.
  • Debt Collection: You may face aggressive debt collection efforts from creditors or collection agencies.
  • Legal Action: In severe cases, creditors can take legal action to recover debts, leading to court judgments.

What is a serious credit infringement?

A serious credit infringement can be recorded on your credit report if you have unpaid debts or if you’re uncontactable at your last known address for six months.

Before listing a serious infringement, credit providers must attempt to contact you, typically through various channels like phone, mail, and email. The specific requirements for contact attempts may vary depending on the situation.

  • A serious credit infringement stays on your credit report for 7 years in Australia.
  • If you pay the default associated with the infringement, it will be converted into a default and stay on your report for 5 years.
  • Your credit history will still show the repayment history and overdue account, even after the infringement is removed.

Difference between Defaults and Serious Credit Infringements

Serious credit infringements can be more damaging than defaults because the key difference between both is the time they stay on reports. 7 and 5 years, respectively.


IntentionUnintentional or due to financial difficultiesDeliberate avoidance of responsibilityReportingReported as ‘late payments’Carries a more serious flagImpact on credit score reported as ‘late payments’Larger and longer-lasting negative impact

TypeDefaultSerious Credit Infringement
MeaningFailed to make payments for a specific periodSignificant overdue debt and deliberate avoidance of lender
SeverityLess severeMore severe
Duration on report5 Years7 Years
ExampleMissing credit card paymentsLeaving home without notifying lender and avoiding contact


Avoid Defaults and Infringements and keep your score healthy

  1. Pay your bills on time: Set up automatic payments or reminders so you never miss a due date. Late payments can hurt your credit score.
  2. Update your info: Moving? Change your phone number? Let your lenders know so they can reach you easily. This helps avoid missed notices and potential defaults.
  3. Don’t ignore warnings: If your lender contacts you about overdue payments, answer them! Explain your situation and work out a payment plan. Ignoring the problem will only make it worse.
  4. Tackle small debts first: Paying off smaller debts can free up cash flow and make managing larger ones easier. Consider consolidating high-interest debts into a lower-rate loan or balance transfer card to save money.

Bonus tip: Check your credit report regularly for errors and dispute them if necessary.

How are the default and infringement listed on your Credit report?


DefaultSerious Credit Infringement
Name of the credit provider and type of loanName of the credit provider who recorded the listing
The amount for which you have defaultedUnpaid amount
Current status of default (paid, settled, unpaid)The date on which the listing was recorded
The date on which the listing will be removed.Name of the debt collector if the debt was sold to a third-party collector
Current status of default (paid, settled, unpaid)



  • Q1 2023 sees a significant surge in Australian consumer credit defaults, surpassing the entire decline in 2022. Highlights escalating financial stress among consumers. Source: illion
  • Record High B2B Payment Defaults: June 2023 witnessed a 52% YoY surge, signaling increased financial stress among businesses. CreditorWatch Business Risk Index hints at rising insolvency rates, emphasizing the profound impact on Australian economic sectors and regions. Source: mpamag


Can you remove the default from your credit report?

A default stays on your credit report for five years, even if paid or settled. It can only be removed if it’s a mistake. Once paid, its status updates to “Paid”; if waived, it changes to “Settled,” but it doesn’t disappear from your report.

What if you request hardship assistance?

If you can’t pay your loan, request hardship assistance in writing from your lender. They can’t list a default until they reply to your request. If you don’t agree on assistance within 14 days of their response, they can then list a default legally.

B M Peachey

B M Peachey, has over 15 years of experience investing in property and the stock market, in both New Zealand and Australia. She has a post-graduate degree, with qualifications in Finance and Mortgage Broking and in Accounting and Bookkeeping. She is passionate about ensuring people have access to credible, reliable, and easy to understand information to help them get in control of the life they REALLY want to live.<

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    Disclaimer: The information in this article is general in nature as it has been prepared without taking account of your specific objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.