Does a Default Go Away After 5 Years in Australia?

Quick Answer: Yes — under the Privacy Act 1988, a default must be removed from your Australian credit file exactly 5 years from the date it was listed. This happens automatically (bureaus are required to remove it) though occasional system errors mean some expired defaults linger and need to be flagged manually. Paying the debt does not shorten the 5-year period. If you can't wait, defaults listed in breach of the Privacy Act 1988 or Credit Reporting Code can be removed professionally in 30–90 days.

Five years is a long time when a default is standing between you and a home loan, a car upgrade, or a business opportunity. The question most people ask isn't just "does it go away?" — it's "how soon, and is there any way to make it happen faster?"

Both questions have clear answers.

The 5-Year Rule: How It Works

Under the Privacy Act 1988, credit providers and bureaus are required to remove default listings from your credit file after exactly 5 years. The clock starts the moment the default is listed with the bureau — not the date of the original missed payment, not the date you paid it, and not the date you became aware of it.

Does the Default Disappear Automatically?

In most cases, yes — bureau systems are designed to purge expired entries automatically when they hit the 5-year mark. But automated systems occasionally fail. Common situations where expired defaults aren't removed automatically include:

• Accounts associated with a closed or archived bureau file
• Older defaults from before digital systems were fully integrated
• Defaults on files that haven't been accessed or updated recently

If you check your credit report and find a default that appears older than 5 years, verify the listing date (not the payment default date) and if it's past the 5-year mark, contact the bureau directly — Equifax, Experian, or Illion — to request removal. This is mandatory under the Privacy Act 1988 and bureaus must comply.

Does Paying the Default Make It Go Away Sooner?

No. Paying a default changes its status from "unpaid" to "paid" on your credit file, but the listing itself remains for the full 5 years from the original listing date. The 5-year clock does not reset or shorten when a debt is paid.

This is one of the most common misconceptions we encounter. People pay defaults expecting them to disappear — and then are bewildered when lenders keep declining them months or even years later.

Can You Remove a Default Before 5 Years?

Yes — if the default was listed in breach of the Privacy Act 1988 or Credit Reporting Code, you have the legal right to challenge it and have it removed, regardless of how much time is left on the 5-year period.

The most common grounds for early removal are:

1. No Section 21D notice issued — creditor must give 30 days written notice before listing
2. Listed while a dispute was active — Credit Reporting Code prohibits listing during genuine disputes
3. Incorrect amount — the amount listed differs from the actual debt
4. Statute-barred debt — debt older than 6 years in most states
5. Wrong person — the listing belongs to someone with a similar name or shared address

ACS handles this process on a No Win No Fee basis. Most successful removals are completed in 30–90 days.

Real Case Study: Priya (different from Post 02), Wollongong — 3 Years Left, Gone in 52 Days

Priya, 40, an accountant from Wollongong, had 3 years and 4 months remaining on a default from a private health insurer — listed in 2023 for an unpaid premium she disputed when she cancelled her policy. She'd been told by a mortgage broker that she'd simply have to wait it out.

Her ACS assessment told a different story. The insurer had listed the default 19 days after sending a notice — not the required 30 days minimum under Section 21D of the Privacy Act 1988. The pre-listing notice period had been violated.

We lodged the challenge on that specific ground. The insurer's compliance team confirmed the notice timeline and acknowledged the breach.

Result: The default was removed in 52 days — 3 years and 3 months before it would have expired naturally. Priya's Equifax score moved from 487 to 711 — a 224-point improvement. She was approved for a home loan at 6.44% p.a. through a mainstream lender. The specialist rate she'd been quoted while the default was active was 9.8% p.a. On a $430,000 loan over 30 years, that rate difference translates to approximately $238,000 in additional interest she won't be paying. She only paid when we succeeded. Subject to individual assessment; results may vary.

Frequently Asked Questions

Does a default automatically fall off your credit file in Australia after 5 years? Yes — bureaus are legally required under the Privacy Act 1988 to remove defaults after exactly 5 years from the listing date. In most cases this happens automatically. If an expired default is still showing on your file, contact the bureau directly and request removal — they must comply. The listing date (not the missed payment date or payment date) determines when the clock expires.

Does paying a default make it go away sooner in Australia? No. Paying a default changes its status from "unpaid" to "paid" in the bureau's records, but the listing remains on your file for the full 5 years from the original listing date. Payment does not shorten the period by a single day. The only way to remove a default before 5 years is to successfully challenge it under the Privacy Act 1988 or Credit Reporting Code.

What if my default is still showing after 5 years? Contact the bureau — Equifax, Experian, or Illion — in writing and request removal, citing the Privacy Act 1988 and the specific listing date. Include a copy of your credit report highlighting the entry. They are legally required to remove it. If they don't respond within 30 days, escalate to AFCA at afca.org.au.

How do I know when my default expires? Look at the "date listed" field on your credit report — not the "date of default" or the payment date. The default expires exactly 5 years from the "date listed." Your credit report from any bureau will show this date in the default entry.

Can the same default appear on multiple bureaus? Yes. If the original creditor reports to multiple bureaus, the default can appear on all of them. Each bureau removes it independently when the 5-year period expires for their listing. It's possible for a default to have slightly different listing dates across bureaus if it was lodged on different days, which would affect when each bureau's copy expires.

Is there any way to stop a default before it's listed? Once you receive a Section 21D pre-listing notice, you have 30 days to either repay the debt in full or enter a payment arrangement before the default is listed. If you can resolve the debt within that window, the default may not be listed at all. If you dispute the debt, the creditor should pause the listing process while the dispute is being assessed — failure to do so is a Credit Reporting Code breach and grounds for removal if they list anyway.

Don't Wait 5 Years If You Don't Have To

Many Australians with defaults on their file have grounds for early removal — they just don't know it. A free assessment from ACS takes 24 hours and tells you exactly what's challengeable.

Australian Credit Solutions is ASIC-licensed (ACL 532003), lawyer-led by Principal Solicitor Elisa Rothschild, and has helped over 5,000 Australians remove unlawful credit file entries 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 Long Does a Default Last? → | How to Remove a Default → | Default Removal Services →