Are you in debt?

Specific privacy protections for individuals’ credit-related information apply under Part IIIA of the Privacy Act 1988 (Cth). These include:

• reporting information about your current credit commitments and your repayment history information (RHI) over the previous two years. RHI includes the day on which a payment is due, and the date on which you paid. It does not include the amount of any missed payment – only the fact that you have made or missed a payment;
• a simplified and enhanced correction and complaints process;
• prohibiting the reporting of defaults of less than $150; and
• allowing an individual to freeze access to their credit related personal information in cases of suspected identity theft or fraud.

If you are slow to pay a debt, the creditor is likely to inform a credit-reporting agency (see Chapter 5.9: Credit reporting). Briefly, under paragraph 9 of the Privacy (Credit Reporting) Code 2014 (Version 2.1), which is registered under the Privacy Act 1988 (Cth), the most common circumstances in which a credit provider (creditor) can make a default listing on your credit report are when:

1. you are at least 60 days overdue in making a payment on a debt; and
2. the credit provider has taken steps to recover the amount outstanding; and
3. the credit provider has notified you at some stage that it will list you in default if you become overdue in paying. (Note that this notification is often contained in the original terms and conditions of the contract with the credit provider.)

It is important to note that lodgment of a default listing on your credit report is not part of the court process for recovery of a debt. This means that a credit provider does not have to automatically lodge a default listing even if it has the right to. If you contact a credit provider when you have failed to pay a debt, you may be able to avoid having a default listing lodged if you enter into an arrangement to repay the debt.

Except in the case of credit-related personal information that is inaccurate, out-of-date, incomplete, irrelevant or misleading, which may include cases where the debt was statute barred, or no longer legally enforceable (see ‘Statute-barred debts’), at the time it was listed, corrections to the default listing are not generally available.

The best you can do is get a note attached to your credit report saying that you have paid off the debt; a default listing cannot be removed just because the debt has subsequently been paid. Default listings stay on your credit report for five years from the date of listing, unless the default is classified as a ‘serious credit infringement’, in which case the listing will remain for seven years.

The most common instance of such a classification is termed a ‘clearout’, where the debtor has moved house without notifying the creditor, who is thus unable to contact the debtor.

Credit-reporting agencies

The three credit-reporting agencies most commonly used by financial institutions are:

• Equifax (previously called Veda Advantage)
• Experian
• Illion (previously called Dun & Bradstreet).

When you apply for a loan, most financial institutions will run a ‘credit check’ on you by accessing your credit file at one of these credit-reporting agencies. If default listings are on your report, it may become harder for you to obtain credit in the future.

Listings are automatically made on your credit report if:

• a judgment is entered against you in a court; or
• you go bankrupt.

While court judgments are held on your credit file for five years, bankruptcies remain there for seven years.