Credit guide: Missed repayments
Are you at risk of default? What you need to know
If you leave an overdue repayment too long, it could turn into a default. This is a serious event.
For you, this means two things. First, it could mean more late fees. Second, it is likely to hurt your credit score. This can make it harder for you to borrow money in future.
What's a default?
A default is a repayment worth more than $150 that's more than 60 days late. It stays on your credit report for five years – even after you pay it.
A default is more serious than an overdue repayment, which is one that’s more than 14 days late and stays on your report for two years.
What does a default mean for your financial future?
A default is likely to negatively affect your credit score, which is a number that indicates how reliable you are when it comes to borrowing and repaying money.
Nearly every time you apply for a loan, credit card or a utility service, such as a post-paid mobile phone plan, your provider looks at your credit score.
If your credit score takes a hit, it could make it harder to get approved in the future.
If you have a default, what should you do?
The most important thing is to pay it as soon as you can.
If you can't pay or are struggling to meet your MONEYME repayment schedule, please get in touch with us. We have options available and are here to work out a payment plan with you.
What happens if you don't pay?
If you don't pay, you could face debt recovery action. In some cases, this might include court proceedings.
If your loan is secured by an asset (a car, for example), the asset might be repossessed.
Can you improve your credit score after a default?
Yes. While a default may have caused your credit score to go down and will stay on your credit report for five years, you can still improve your credit score by practicing good credit habits.
That’s because your credit report is a comprehensive record of your credit history. Both good and bad credit behaviour is listed on there.
So, even if you have a history of negative events, such as defaults, you can make up for them by making repayments on time, every time, in the future.
Learn more about your credit score
You can check your score for free in the MONEYME app. It only takes a minute, and you will get personalised insights as well as tips on how to improve your score.