Small loan with an Equifax default in Australia

A default listed on your Equifax file is one of the most damaging entries an Australian credit report can carry. It tells lenders that a debt went unpaid long enough for the creditor to report it, and it can lead banks to decline even a small personal loan or a credit card. It does not, however, make borrowing impossible, and in many cases it can be checked, corrected or put into context.

This page explains what an Equifax default is, how long it stays, how to check and dispute it, what kind of small credit may still be available and which free or low-cost alternatives are worth trying first. Mini-Pret.com does not lend, broker or recommend lenders.

What a default listing actually is

Australia has three main consumer credit reporting bodies: Equifax, Experian and illion. Each keeps its own file on you, so a default may appear with one bureau and not the others, depending on which bureaus the creditor reports to. Credit reporting is governed by Part IIIA of the Privacy Act 1988 and the Privacy (Credit Reporting) Code.

A creditor can only list a default if strict conditions are met. In broad terms, the payment must be at least 60 days overdue, the amount must reach a minimum threshold, and the creditor must have sent you written notice asking for payment and warning that it may report the debt. If any of these steps was skipped, the listing may be incorrect.

Other negative entries you might see

• Repayment history information: month-by-month records of whether you paid on time, kept for two years.
• Serious credit infringement: recorded when a creditor believes you obtained credit fraudulently or moved without intending to pay; this can stay longer than a default.
• Personal insolvency information: bankruptcy or debt agreements, taken from the National Personal Insolvency Index kept by the Australian Financial Security Authority (AFSA).
• Credit enquiries: each application you make, which lenders can also see.

How long a default stays on your Equifax file

A consumer credit default is normally kept for five years from the date it was listed. Paying the debt does not remove it, but the creditor must update the status to "paid", and lenders often treat a paid default far more kindly than an unpaid one. Personal insolvency entries follow their own retention rules, which AFSA explains on its website.

Because the five years run from the listing date, a default listed long ago weighs less than a recent one. Many lenders look closely at the last 12 to 24 months of repayment history, so a run of on-time payments after a default genuinely helps.

Checking and disputing a default

You are entitled to a free copy of your credit report from each bureau, and you can request it again every three months at no cost. Order your Equifax report directly from Equifax and compare it with the Experian and illion versions.

If a default looks wrong, for example the amount, the date, the creditor or the notice process is incorrect, or it is a debt you never owed, follow these steps:

1. Ask the credit provider or Equifax to correct the information, explaining why and attaching any evidence.
2. The body you contact must investigate and respond, generally within 30 days, and coordinate with the other party.
3. If you are not satisfied, complain to the Australian Financial Complaints Authority (AFCA), which is free for consumers, or to the Office of the Australian Information Commissioner.

A correct default cannot be removed simply because it is inconvenient. Be cautious of "credit repair" businesses that charge large fees to dispute listings: you can lodge the same correction request yourself for free, and they cannot remove accurate information.

Can you still get a small loan with a default?

Some licensed lenders specialise in borrowers with impaired credit. Expect higher costs, smaller amounts and closer checks of your bank statements. Every licensed lender must still meet responsible lending obligations and decline a loan that would be unsuitable for you. Our overview of small loans in Australia explains the licensing rules and the fee caps that apply to small amount credit contracts.

A new loan taken to cover arrears often deepens the problem. If your default comes from broader financial stress, read our guide to borrowing with bad credit and consider talking to a financial counsellor before applying.

Checklist before applying

• Get your reports from all three bureaus and fix any errors first.
• Make sure the default is updated to "paid" if you have settled it.
• Check the lender's Australian credit licence on ASIC's professional registers.
• Compare the total cost, including establishment and monthly fees, not only the repayment amount.
• Limit applications: each one is recorded as an enquiry.
• Keep repayments to an amount you can meet alongside rent, food and bills.

Cheaper alternatives worth trying first

• Hardship arrangements: if you are behind with an existing creditor, ask for a hardship variation. Lenders must consider these requests under the National Credit Code.
• No Interest Loan Scheme (NILS): community-based, interest-free loans for essential goods and services for people on low incomes, available even if your credit history is poor. Our page on the interest-free loan idea covers how such schemes generally work.
• Centrelink advance payments: if you receive certain income support payments, you may be able to get part of a future payment early, without interest.
• Free financial counselling: counsellors can negotiate with creditors and help you check whether a default was listed correctly.
• Credit unions and mutual banks: some will consider your recent history and explanation rather than a score alone.

Rebuilding your file after a default

The fastest way to improve your position is a consistent record of on-time payments on any credit you still have, including phone and utility accounts where they are reported. Keep credit limits low, avoid multiple applications in a short period and check your file every few months. Once the default reaches five years, check that it has been removed from each bureau's report.

Scams targeting people with defaults

People with a poor credit history are a favourite target. Treat these as red flags:

• "guaranteed approval" or "we can remove any default" promises;
• requests for an upfront fee, insurance payment or gift cards before a loan is released;
• offers arriving through social media messages, text messages or unsolicited calls;
• a company that cannot show an Australian credit licence number.

Check suspected scams against ASIC's Moneysmart guidance, and see our page on loans advertised with no credit check for further warning signs.