A credit report is a document produced by a credit reporting body or bureau using your personal information which is supplied by credit providers and other approved sources. A credit reporting body or bureau is an organisation that collects information relating to credit ratings and scores. They do this to make key financial information available to lending institutions such as banks and loan companies so they can determine if you are suitable to be granted credit.
Some of the main credit reporting bodies in Australia include Equifax, Experian and Illion. The personal information they list can include identification details, past or current consumer loans and debts, your repayment history and failures to meet your repayment obligations such as defaults, court judgements and bankruptcies.
Every single person has a credit report and can request a free copy once every three months. Additionally, requesting a free copy is allowed if you have been refused credit within the past 90 days. Ideally, you will want to keep your report positive as it will allow you to loan sums of money for important business or personal purchases during your life. But even with the best intentions in mind, an unforeseeable event can quickly cause you to lose track of your repayment obligations and leave you with a bad credit report.
If any negative financial events occur, they will generally stay on a report for at least 7 years. The big one to avoid is having a court judgement remain on your report for over five years as this will impact your ability to obtain any credit. This Legal Kitz blog will be discussing some key steps you can take to remove a court judgement.
What are the main steps to remove a court judgement from my credit report?
Please note that these steps should be taken after you have rectified the previous negative court judgement against you. This means that you have paid off the necessary repayments ordered against you.
How do I write to the credit provider about my credit report?
One of the first steps to take when you are trying to remove a court judgement is to write to the credit provider. The credit provider is the first point of contact as they were the party who you owed the finances to and the party responsible for placing the court judgement against you. When you write to them, you should be asking them to confirm, in writing, that you have now paid them back. You should be obtaining this documentation as it shows that you have fully satisfied the court judgement debt placed on you and made positive steps to rectify your situation.
How do I write to the credit reporting body or bureau?
Once you have obtained the letter from the credit provider, you should provide this evidence to the credit reporting body to support a written request, by you, to remove the negative judgement from your record. If you are lucky, this step alone may be sufficient to remove the court judgement from your credit rating. However, large bodies like Equifax will not deem evidence of the repayment of your debt sufficient alone.
Unless the judgement on your report is incorrect, it can be challenging to remove a negative judgement before its automatic removal date which can range from two to seven years. This step will usually encourage the credit provider to add a notation to your judgement to say you have rectified the debt. That being said, you will still need to complete more steps to try and obtain credit in this two to seven year period.
How do I set aside the judgement with consent from a creditor?
Another way to remove a judgement from a credit report is through signed consent orders to set aside a previous judgement from the judgement creditor. If a judgement creditor files such orders, your credit reporting agency will receive an automatic notification to update and remove the judgement from your credit report.
However, be prepared for banks and other lenders to be reluctant to do this and it will be especially hard if you are yet to repay your debt. One of the common situations that can help is trying to set aside a partially paid judgement debt by entering a deed of settlement. This deed is basically a promise on how to settle the debt at hand and will typically permit the creditor to set aside the judgement but be able to obtain a new judgement if you default on the deed.
How do I set aside a default judgement by applying to the court?
In these circumstances, you may also find that a default judgement is given to you where you haven’t filed for any defence. We recommend seeking clarification from a judgment creditor before applying to have a default judgment set aside. However, if you have paid all finances, it is unlikely that a judgment creditor will oppose your application to the court. Even if a judgment creditor has no issue with you applying to the court to set the judgment aside, you must address the following criteria in your application to dispute the judgement.
First, you should provide a satisfactory reason as to why you did not file a defence within the 28-day time limit set by the court. Some valid reasons for this may include not being made aware, hospital bound or being overseas during the claim period. Then, you should show that you have genuine grounds to defend against the judgement such as not owing the debt or having an incorrect amount claimed against you. With any argument, you should collect and provide actual factual evidence.
What do I do if the creditor starts taking enforcement action?
Following a time limitation that is imposed on you, the creditor may be unsatisfied that you have met your requirements and will decide to take action. If you end up in this situation, you cannot apply to set aside the judgement on your credit report. However, you can make an application to “stay” the proceedings which will prevent a creditor from enforcing the judgement. This will be in action until your application to set aside the judgement is dealt with (the previous step).
Legal advice
Judgements on your credit report may hinder your ability to obtain a loan, credit card or make important purchases and investments in your life. While it is a tricky process, applying to the right bodies to remove a judgement can allow you to progress with business endeavors, remove roadblocks and reduce interest rates on your loans. If you are having trouble with a court judgement on your credit report, Legal Kitz can help! We offer a FREE 30-minute consultation for any of your legal needs. Book here now!