Default on Credit File: How to Fix It in Australia (2026)

Quick Answer: To fix a default on your Australian credit file, first determine whether the listing was lawful. Under the Privacy Act 1988, credit providers must issue a Section 21D written notice at least 30 days before listing, and cannot list while a genuine dispute is active. Unlawfully listed defaults can be formally challenged and removed — typically in 30–90 days. Lawfully listed defaults cannot be removed early; they expire after 5 years from the listing date. ACS achieves a 98% success rate on accepted removal cases.

Discovering a default on your credit file is a gut-punch moment. Maybe you knew about the debt. Maybe you didn't. Either way, there it sits — visible to every lender, landlord, and employer who checks your file, silently blocking the opportunities you're working towards.

Here's what most people don't know: a significant proportion of defaults on Australian credit files were listed in breach of the law. And when that's the case, the default can be removed — often faster than anyone told you was possible.

What a Default Actually Is

A default is a formal record that you failed to repay a debt of $150 or more after being given the required notice. Under the Privacy Act 1988, a credit provider must issue a written Section 21D notice to the debtor's last known address at least 30 days before listing the default. The notice must state the amount, the creditor, and the intention to list.

If the debt remains unpaid after 30 days and the notice was properly issued, the default can be lawfully listed. It then stays on your credit file for five years from the date listed, regardless of whether you subsequently pay.

The critical detail most people miss: the requirement to issue that notice is often breached. Many creditors either skip it entirely, send it to an outdated address, or list the default while a dispute is still open. Each of these is a breach of the Privacy Act — and each creates grounds for removal.

Can Your Default Be Fixed? The Key Questions

Ask yourself these questions about your default:

If you answered yes to any question other than the first, there is at least one potential ground for challenge. A professional assessment will confirm whether that ground is strong enough to proceed.

How to Fix a Default: Step by Step

1. Get your full credit report from Equifax, Experian, and Illion. Note the creditor name, listing date, amount, and status (paid/unpaid).

2. Gather your records — payment receipts, dispute correspondence, any written communication with the creditor around the time the default was listed. If you raised a complaint anywhere (ombudsman, AFCA), find the reference numbers and dates.

3. Identify your challenge grounds — use the table above as a starting point. The strongest grounds are procedural (no notice, listed during dispute) because they're documented and binary: either the notice was sent or it wasn't.

4. Write a formal challenge to the credit provider — email is acceptable. State your name, the account, the specific breach, and the outcome you're seeking (removal of the default). Cite the Privacy Act 1988 and/or Credit Reporting Code specifically. Give them 30 days to respond.

5. If unresolved, lodge with the bureau — each bureau has a formal dispute process. Submit in writing with supporting documentation. The bureau is required to investigate.

6. Escalate to AFCA if needed — the Australian Financial Complaints Authority at afca.org.au handles unresolved credit complaints and can order removal where a breach is established.

7. Consider professional representation — if the creditor disputes your challenge or the grounds are complex, Australian Credit Solutions handles the entire process on a No Win No Fee basis with a 98% success rate on accepted cases.

Real Case Study: Callum, Townsville — Default Fixed in 41 Days

Callum, 38, a project manager from Townsville, found a $1,140 default from a building supplies company on his Equifax file. He'd ordered materials for a renovation project three years earlier. There had been a dispute over damaged goods — he'd withheld the final payment while the claim was being processed. The supplier listed the default while the dispute was formally open with their customer service team.

He'd been told by his bank that there was nothing he could do — it would clear in two more years. His ACS assessment told a different story.

The Credit Reporting Code is explicit: a default cannot be listed while a genuine, documented dispute remains unresolved. Callum had email records confirming the dispute was open at the time of listing. That was the breach.

We drafted the formal challenge, cited the Credit Reporting Code and Privacy Act 1988, and lodged with the supplier and Equifax. The supplier initially pushed back. We escalated with the documented evidence. On day 41, the default was removed.

Result: Callum's Equifax score moved from 452 to 693 in 41 days — a 241-point improvement. He'd been planning a refinance to consolidate debt at a lower rate. Post-removal, his bank approved the refinance at 6.44% p.a. The specialist lender rate he'd been quoted before contacting ACS was 10.9%. On his $210,000 refinance over 7 years, total interest saved: approximately $38,400. He only paid when we succeeded. Subject to individual assessment; results may vary.

What If the Default Was Lawfully Listed?

If the default was correctly listed — proper notice was issued, no active dispute existed, the amount is accurate — it cannot be removed before the 5-year expiry. That's the honest answer, and any company claiming otherwise is not operating ethically.

What you can do in this situation:

• Pay the debt — it updates the status to "paid," which some lenders view more favourably in manual assessments
• Rebuild your file — consistent on-time repayments under CCR actively improve your score over 6–24 months
• Plan your applications — some non-conforming lenders will consider applications after 12–18 months of clean repayment history post-default, even with an active listing
• Review your other entries — there may be other items on the file (enquiries, other defaults) that can be addressed, improving your overall score even if the specific default remains

Frequently Asked Questions

Can a default be removed from a credit file in Australia? Yes — if the default was listed in breach of the Privacy Act 1988 or Credit Reporting Code, it can be formally challenged and removed. The most common grounds are: no Section 21D pre-listing notice, listing during an active dispute, incorrect amount, or statute-barred debt. Lawfully listed defaults cannot be removed before the 5-year expiry.

How long does it take to remove a default in Australia? Most successful removals are completed in 30–90 days from when the challenge is lodged. Simple procedural breaches (no notice issued) often resolve in 30–45 days. Contested cases where the creditor initially disputes the challenge can take up to 90 days through escalation to AFCA. ACS's average resolution time is 47 days.

Does paying a default fix my credit file? No — paying a default changes its status from "unpaid" to "paid" in bureau records, but the default listing itself remains on your file for the full 5 years from the original listing date. Paying does not remove the entry and does not significantly improve your score on its own.

What is a Section 21D notice? A Section 21D notice is the written pre-listing notice a credit provider is legally required to send before listing a default, under Section 21D of the Privacy Act 1988. It must be sent to the debtor's last known address at least 30 days before the default is listed, and must state the amount and intention to list. Failure to issue this notice is the most common grounds for successful default removal.

Can I fix a default myself without paying a credit repair company? Yes — you can self-lodge challenges with credit providers and bureaus at no cost. Professional credit repair is worth considering when the grounds are complex, the creditor disputes your challenge, multiple entries are involved, or a loan application is time-sensitive. ACS offers a free assessment to help you understand your options before committing to anything.

How much does my credit score improve when a default is removed? Score improvement is immediate when a default is removed. The exact amount depends on the composition of your full credit file, but a single default removal typically improves an Equifax score by 80–200 points. Clients with multiple entries removed in a single process have seen improvements of 200–350+ points. Subject to individual assessment; results may vary.

Get Your Default Assessed Today

A free assessment from Australian Credit Solutions tells you within 24 hours whether your default can be challenged, what the grounds are, and what your realistic outcome looks like.

Australian Credit Solutions is ASIC-licensed (ACL 532003), lawyer-led by Principal Solicitor Elisa Rothschild, and has helped over 5,000 Australians remove unlawful defaults since 2014. No Win No Fee. 98% success rate on accepted cases.

Get My Free Assessment → 📞 0489 265 737 🛡️ ASIC Licensed ACL 532003 | ⭐ 4.9/5 from 976+ Reviews | 🏆 Award Winner 2022–2024

Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. This article provides general information only and does not constitute legal or financial advice.

Related reading: How to Remove a Default → | Default Removal Services → | DIY vs Professional Credit Repair →