A default is also known as an overdue debt. There are two types of defaults; consumer and commercial payment defaults.
Consumer payment default - A consumer payment default can be reported by a credit provider and listed on your credit report if you have an overdue debt of equal to, or more than $150 and it is more than 60 days overdue. For example, if you have a mobile phone bill of over $150, and it was due more than 60 days ago, it could be listed on your credit report as a payment default by the phone company.
Before reporting a consumer default, the credit provider must take a number of steps such as sending two separate written notices to your last known address; first requesting payment and secondly communicating an intention to list the overdue payment with a credit reporting body (like Equifax).
Commercial payment defaults - In the case of commercial credit the minimum default amount is $100. Before listing commercial defaults or overdue debts commercial credit providers or their agents must send a notice to your last known address stating their intention to list the default amount with a credit reporting body such as Equifax.
Potential credit providers may look unfavourably on applicants with a history of overdue accounts if they consider the applicant’s credit information as part of their lending assessment: so it’s a good idea to avoid defaults getting onto your credit report. To do this, you need to ensure you make your repayments and pay your bills before they become overdue.
Both consumer and commercial payment defaults stay on your credit report for five years, even when you have paid the overdue amount. When you have paid a default, the status is updated to ‘paid’ which can be looked upon more favourably by lenders but it will remain as part of your credit history.