A credit report is a report generated by a credit bureau and details your credit history, including your repayment history, overdue accounts, writs and summons and court judgements related to debts. Everyone has a credit report. However, court judgements remain on your credit report for five years and can impact your ability to obtain credit, whether this is for a mortgage or a personal business loan. Therefore, it is important to know what action you can take to remove a court judgement from your credit report. This article explores the five steps you can take to have a court judgement removed from your credit report.
What Is a Credit Report?
A credit report contains information about your credit history. Credit bureaus are the entities who create credit reports. A credit bureau is a company or organisation that collects information relating to the credit ratings or credit scores of individuals. They then make this information available to lending institutions, including banks. The lending institutions use the credit report to look at your financial history and help them determine whether they will grant you credit.
Your credit report is based on various factors, including your:
- repayment history;
- credit enquiries;
- overdue accounts listed as payment defaults;
- writs and summons; and
- court judgements related to debts. A court judgement will remain on your credit history for five years, even if you have repaid the relevant debt.
If you want to remove the court judgement from your credit report, you will need to take the following five steps.
1. Write to the Credit Provider
The first thing you should do is write to the credit provider. This is the person who obtained the judgement against you and who you owed money to. You should ask them to confirm, in writing, that you have paid them back. It is important to have this documentation to show that you have fully satisfied the judgement debt.
2. Write to the Credit Bureau
The second step is to provide the letter from the credit provider to the credit reporting agency alongside a request that they remove the judgement from your record. For some credit reporting agencies, just this step alone will be sufficient to remove the court judgement from your credit rating.
Unfortunately, other credit reporting agencies may simply add a notation to your credit report saying that you have repaid the judgement debt. Some future credit providers may be satisfied with seeing that you have repaid the judgement debt. However, for most lenders, even just having a court judgement on your credit report will deter them from providing you with credit.
Whether you’re a small business owner or the Chief Financial Officer of an ASX-listed company, one fact remains: your customers need to pay you.
This manual aims to help business owners, financial controllers and credit managers best manage and recover their debt.
3. Get a Signed Consent Order
The next option if your credit bureau refuses to remove the judgement is to ask the credit provider to sign consent orders. The consent orders should state that the parties agree to put aside the judgement and discontinue the proceedings. If your creditor agrees to sign the consent orders, they will need to file them with the appropriate court registry. The court will then consider the consent orders and make a decision. If appropriate, the court will make the orders and advise the parties that it has entered them. Once the parties have entered the orders, the credit reporting agency will be notified. The agency will then update its records and you can have the court judgement put aside.
4. Apply to the Court Seeking to Set Aside the Judgement
In some instances, a judgement creditor will not agree to sign consent orders. This is because once the court has entered a judgement, the judgement creditor has no obligation to consent to set aside the judgement. In this case, you will need to apply to the court yourself.
5. What if I Dispute the Debt?
To have the opportunity to dispute a judgement debt, you will need to apply to the court that issued the judgement to set it aside.
An application to set aside a default judgement must address the following:
- the reason you failed to file a defence within the time frame (e.g. the creditor did not serve you with the statement of claim);
- any bona fide (honest) defence you have in respect of the claim; and
- the reason you have delayed in making the application (if applicable).
Where you have paid the judgement debt, this may be regarded as admitting the validity of the creditor’s claim. This can make getting an order to set aside the default judgement very difficult, as you have already admitted that you were previously in debt and needed to pay someone back.
Key Takeaways
A court judgement lingering on your credit report for five years is highly problematic. It could mean that you are not able to obtain a mortgage or secure a business loan in your name. If you want to remove a court judgement from your credit report, there are several steps you can take. These include speaking to your credit provider, credit bureau, creditor and if necessary, applying to the court to have it removed. If you have any questions about getting a judgement removed from your credit rating, get in touch with LegalVision’s dispute resolution lawyers on 1300 544 755 or fill out the form on this page.
Frequently Asked Questions
A credit report is a summary of your credit history. This is created by credit bureaus and made available to lending institutions, such as banks, to help assess the risk associated with granting you credit.
If you borrow money from a lender and fail to pay it back, they can sue you for an unpaid debt. If you lose, the court will enter a judgement that will appear on your credit report.
Court judgements can remain on your credit report for five years and can impact your ability to obtain credit. It might also mean that lenders impose higher interest rates on your loans.
Ask the credit provider that issued the judgement against you to confirm in writing that you have paid them back. You should send this letter to the credit bureau and request that they remove the judgement. If they still refuse to remove the judgement, you should get a signed consent order or apply to the court seeking to set aside the judgement.
To dispute a debt, you need to apply to the court that issued the judgement to set it aside. Your application will need to explain why you failed to file a defence in the applicable time and outline your case.
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