The $150 / 60-Day Rule: When a Credit Default Is Unlawful and Must Come Off Your File

The broker rang back with bad news. Your application was declined because of a $412 default from an energy retailer, listed two years ago, at an address you left three years ago. You never received a bill. You never received a warning. The first you heard of it was a lender saying no.

Credit defaults are not a free-for-all. The Privacy Act 1988 sets strict preconditions before a creditor can report one, and a default that doesn’t meet them must be corrected or removed. This is federal law, identical in every state, and you don’t need a credit-repair company to invoke it.

Your rights

Part IIIA of the Privacy Act 1988 (Cth) and the Privacy (Credit Reporting) Code govern what a credit provider can disclose to Equifax, Experian and illion. A “default” can only be listed if all of the following are true:

• The overdue amount is at least $150 (s 6Q).
• The payment is at least 60 days overdue (s 6Q).
• You were sent a written notice of the overdue amount requesting payment, and then, at least 14 days later, a separate written notice stating the creditor intends to disclose the default to a credit reporting body (s 21D and the Code). Both notices must go to your last known address, and the creditor must have taken reasonable steps to have current contact details.
• The debt is not the subject of a hardship arrangement under which you’re meeting the varied terms, and it’s not a disputed amount the creditor knows is contested.

Once listed, a default stays on your file for 5 years from the listing date, and must be updated to “paid” when you pay it. If any precondition wasn’t met, the information is inaccurate, and the creditor and the credit reporting body must correct it within 30 days of your request (ss 20T and 21V), notify the other bodies and anyone they’ve disclosed it to, and tell you in writing what they did. Correction of an unlawful listing means removal.

This is Commonwealth law and there is no state component, so this post has no by-state section.

What to do right now

1. Get all three reports. Equifax, Experian and illion each hold a separate file, and a default may sit on one or all. They’re free.
2. Identify the failure. Amount under $150? Listed fewer than 60 days after the due date? No notices received, or sent to an old address after you’d given the new one? Debt paid or in hardship at the time? Amount wrong? Not your account? One is enough.
3. Ask the creditor for its notices. In writing: copies of the overdue notice and the s 21D notice of intention to list, the address they were sent to, and the dates. Creditors that can’t produce them have a problem.
4. Send a formal correction request to the creditor that listed it. Name the bureau that holds the listing, cite Part IIIA and the Code, identify the precondition that wasn’t met, demand correction (removal) within 30 days, and request written confirmation plus notification to every bureau that holds it. A separate request to the bureau itself is a Credit Report Dispute.
5. Diarise day 30. If it hasn’t come off, or they say no, lodge with AFCA or the OAIC the next day. Both are free.

“Paid” is not the same as “removed”

Creditors often respond to a complaint by offering to mark the default as paid. If the listing was lawful, that’s what you’re entitled to and the default stays for its 5 years. If the listing was unlawful, “paid” is not a correction; the accurate record is that no default should have been listed at all, and the remedy is removal. Say so explicitly in your letter. Credit-repair firms charge a fee to send exactly this request; the law they rely on is the same law you can cite yourself, and AFCA and the OAIC take complaints from individuals every day.

The other listings that come off

Defaults get the attention, but the same correction right covers everything on your file. Repayment history information (the monthly “on time / late” markers on loans and cards) must be accurate and can’t show late payments during an approved hardship arrangement; since 2022 a separate financial hardship indicator is used instead, and it comes off after 12 months. Enquiries you didn’t make (a lender ran a check without an application from you) can be removed. A court judgment that was set aside, or that isn’t yours, is inaccurate and must be corrected. An identity theft listing can be corrected and you can ask the bureaus for a ban period while it’s sorted out. Each of these is a request under the same Part IIIA provisions with the same 30-day clock, and the letter should list every inaccurate item, not just the default that triggered the decline.

Who to complain to

AFCA (free, binding on members) where the creditor is a bank, lender, telco, energy retailer or debt buyer that is an AFCA member; it considers complaints about default listings. OAIC (Office of the Australian Information Commissioner) for a privacy complaint against any credit provider or credit reporting body, after you’ve complained to them first. The Telecommunications Industry Ombudsman or your state energy ombudsman if the default was listed by a telco or energy retailer that isn’t an AFCA member.

Ask for the default to be corrected — $49

Claim Done drafts a Credit Default Removal Request to the creditor that listed the default, naming the credit reporting body that holds the listing. It identifies the Privacy Act precondition that wasn’t met, cites Part IIIA and the Credit Reporting Code, demands correction within 30 days, and sets out the AFCA or OAIC complaint you’ll lodge if they don’t.

Draft My Default Removal Request — $49 →

You review every word before it’s sent.

For the full process, see how to remove a default from your credit file.