What is a serious credit infringement in Australia?

Michael Blyth

Arca

GM: Policy & Advocacy / RDEA CEO

Falling a few days behind on a phone bill or a personal loan repayment doesn't usually cause lasting damage.

Being more than 14 days late on a consumer credit repayment can show up in your repayment history. But that alone is a long way from the most serious listing on a credit report.

The picture changes once a debt is left unresolved. If a payment of $150 or more sits 60 days overdue, it can be listed as a default. And if six months then pass without any contact between you and that provider, the default can escalate further, and a serious credit infringement may be recorded on your credit report.

Table of contents:

Quick takeaways

An SCI is defined in section 6(1) of the Privacy Act 1988 and comes in three forms: fraudulently obtaining credit, fraudulently evading credit obligations, and the "no contact" category the industry calls a clearout.
Clearouts are the most common by far, and they don't require any intention to defraud.
Before a clearout SCI can be listed, your provider must already have listed a default for the same debt and must have tried to reach you by phone, email and mail — and if those attempts suggest your details are out of date, it must take reasonable steps to find new ones and try again.
An SCI stays on your credit report for seven years from the day the credit reporting body receives it.
If you pay or settle a clearout SCI, the credit reporting body is required to destroy the SCI record. The underlying default stays, marked as paid.
Correcting a credit report is free, at every stage. You never need to pay a credit repair company.

A serious credit infringement (SCI) is one of the most damaging entries that can appear on your credit report. It stays on your file for seven years, and it signals to lenders that you've either acted fraudulently or deliberately walked away from a debt.

Some people who end up with one may not have intended to avoid paying. They moved house, changed phone numbers, and missed the warning letters.

So what exactly qualifies as a serious credit infringement, how is it different from a standard default, and what can you do if one appears on your report?

What is a serious credit infringement, and why does it happen?

Under section 6(1) of the Privacy Act 1988, a serious credit infringement falls into one of three categories:

Fraudulent credit applications. Providing false information to obtain a loan, credit card or other credit product.
Fraudulent evasion. Deliberately avoiding your obligations on an existing credit account by lying to your credit provider (or getting someone else to lie for you).
Clearout (the most common type). Your credit provider believes you've abandoned a debt. They've already listed a default, they've tried to contact you by phone, email and post for at least six months, and they haven't been able to reach you.

The clearout category is how most SCIs happen. It doesn't require any intention to defraud. It's usually a combination of an unpaid debt and a lender who can't find you.

Before listing an SCI, the credit provider must follow strict steps set out in section 12 of the Privacy (Credit Reporting) Code 2025.

They must have already listed a default for the same debt, attempted contact through multiple channels, tried to find out your updated contact details (if the old ones aren’t current), and sent a written warning by post explaining that an SCI will be listed if six months pass without contact.

Serious credit infringement (i.e. clearout) vs standard default

	Standard default	Serious credit infringement
When it's listed	Payment is $150 or more and at least 60 days overdue	6+ months pass with no contact between you and the provider, and a default has already been listed for the same debt
Required notices	A section 6Q notice, then a separate section 21D(3) notice at least 30 days later	All of the default notices, plus contact attempts by phone, email and mail, including a mailed letter warning that an SCI will be listed
Time on credit report	5 years from the day the credit reporting body receives it	7 years from the day the credit reporting body receives it
What it signals to lenders	You fell behind on a payment	You may have deliberately avoided your debt, and you couldn't be found
What happens when you pay	Status changes to "paid", but the listing stays for 5 years	The credit reporting body must destroy the SCI record. The underlying default remains, marked as paid, for 5 years from when it was listed

Important: every requirement in the right-hand column of the table applies only to clearout SCIs.

An SCI based on fraud (either of the first two categories above) needs no prior default, no six-month waiting period and no contact attempts, and paying the debt does not require the listing to be removed.

Fraud SCIs are rare, and the evidentiary bar on the provider is high, but the rules are genuinely different.

How can a serious credit infringement affect you?

An SCI affects more than just a number on your credit score. It can change what you're able to do financially for years. Credit reporting bodies like Equifax and Experian (now includes information from illion) all factor SCIs into their scoring models, and a single listing can cause a significant drop.

Here's what that looks like in practice:

Home loans. Most banks and mortgage lenders will decline your application outright while an SCI is on your file. For many people, this is where the impact hits hardest.
Personal loans and car finance. Mainstream lenders treat an SCI as a sign of high risk. Some specialist or non-conforming lenders may still consider your application but expect higher interest rates and stricter conditions.
Credit cards. Standard credit card applications from major banks are unlikely to be approved with an SCI on your report.
Buy now, pay later. BNPL providers now fall under the National Credit Code and conduct credit checks. An SCI can affect your ability to open new BNPL accounts.
Renting a property. Real estate agents can't access your consumer credit report directly under the Privacy Act. But some landlords or agents may ask you to provide a copy of your report as part of a rental application. An SCI on that report can work against you.
Phone and internet plans. Telcos check your credit before approving postpaid plans. An SCI may mean you're limited to prepaid options.
Business finance. If you're self-employed or applying for a small business loan with a personal guarantee, an SCI on your consumer file can affect approval.

Visit our financial hardship assistance page to learn more about your options.

View financial hardship assistance page

How a serious credit infringement typically happens

Here's a worked example showing how a clearout SCI unfolds, including some of the required steps that a lender may miss before listing clearout. The scenario is illustrative, but every requirement it describes is real.

The loan

Let’s imagine that Mary took out a $4,800 personal loan in 2023 and made her repayments for eight months without issue.

The move

When her contract (job) role ended, and with a view to saving money, she moved in with family in another suburb. She updated her address with her bank and her energy retailer, but not with the personal loan provider. Her old mobile number lapsed a few weeks later, and she stopped checking the email address she'd used on the loan application.

The notices

After her payments fell 60 days behind on an amount well over $150, the lender sent a section 6Q notice telling her the payment was overdue and asking her to pay.

More than 30 days later, it sent a separate section 21D (3) notice indicating that it intended to disclose the default to a credit reporting body. Both went to her old address. The new occupants of Mary’s old house did not return the letters to the lender or forward them to Mary’s new house.

Fourteen days after the second notice, with no response, it listed the default.

Note: If the letters had been returned, the lender would have been expected to act on that information before listing the default.

The six months

From the date of the section 6Q notice, the lender's six-month clearout clock began.

So, over that period, it called her old mobile (disconnected), emailed the inbox she'd stopped checking, and sent two more letters, one of which set out the particulars of the default and warned that an SCI would be disclosed if six months passed without contact.

Unlike the earlier letters, these letters were returned to the lender by the new occupants of Mary’s old house.

Mary received none of it. At the end of the six months, the lender disclosed the SCI.

What the lender should have done next

Under section 12(5)(b) of the Credit Reporting Code, the disconnected phone number and the returned mail were exactly the signals that should have triggered a search for current contact details (and if it found them, the lender was required to run its contact attempts again using the new ones).

What it actually did was re-send to the same address. Its own systems held a more recent address for Mary on a second product she'd taken out with the same group, and an active email she had used to correspond with its collections team five months earlier.

Neither was used. It also could not produce, as section 12(5)(e) requires, evidence of any attempt to trace her beyond the details on the original application.

Finding out.

Mary discovered the listing 14 months later, when a home loan pre-approval was declined. She requested her free credit report from both credit reporting bodies and found the SCI, the date it was collected, and the provider that listed it.

The correction.

She wrote to the lender asking for copies of the section 6Q notice, the section 21D(3) notice, and the SCI warning letter, together with the dates and addresses to which each was sent, and the record of contact attempts.

Once the gaps were clear, she lodged a free correction request. The lender accepted that the listing was procedurally flawed and asked the credit reporting body to destroy the SCI.

Because the SCI was removed on procedural grounds rather than paid out, the underlying default remained on her file, a materially better outcome, and one she was then able to address separately.

Can a serious credit infringement be removed?

Yes, in two situations.

1. If the listing was made incorrectly, or in breach of the Privacy Act or the Credit Reporting Code, you can have it corrected and removed. Credit reporting bodies (section 20T) and credit providers (section 21V) must correct personal information they're satisfied is inaccurate, out of date, incomplete, irrelevant or misleading.

Corrections are free at every stage (neither can charge you for making the request or fixing the information).

2. If you pay or settle a clearout SCI, section 12(7) of the Credit Reporting Code requires the credit reporting body to destroy the SCI record once the provider reports the payment. Note that this is destruction of the SCI, not a re-labelling of it (there's no such thing as a "paid SCI").

The underlying default stays on your report, marked as paid, for five years from the day it was listed. This rule applies to clearouts only; paying a fraud-based SCI does not trigger it.

Common grounds for removal include:

Each of these grounds comes from a specific requirement in the Privacy Act 1988 or the Privacy (Credit Reporting) Code 2025. If the provider can't show it met the requirement, the listing shouldn't be there.

1. The provider didn't take reasonable steps to find your current contact details.

This is the ground that most often applies. If the notices went to an old address or a disconnected number, the outdated address isn't the issue itself (the question is what the provider did once it had reason to think your details were stale).

Section 12(5)(b) of the Credit Reporting Code requires it to take reasonable steps to find new details, and to repeat its earlier contact attempts if it finds them. Returned mail, a disconnected number or a bounced email are precisely the triggers.

Ask whether the provider held a more recent address or a working email on another product, or through a related company, and simply didn't use it.

2. No default was listed before the SCI, or the default itself wasn't listed properly.

Section 12(4) of the Credit Reporting Code requires the overdue payment to have already been disclosed as default information before a clearout SCI can be listed.

That covers two situations: no prior default at all, or a default listed without the correct process being followed.

If the default has to come off, the SCI built on it goes with it.

3. You were in contact with the lender during the six months.

Section 12(6) of the Code restarts the six-month period from scratch if you make contact at any point during it. A single phone call is enough.

If you spoke to the provider or its collections agent and the SCI was listed anyway, the clock was never validly run.

4. A hardship request was on foot.

Under section 9 of the Credit Reporting Code, a provider must not disclose an overdue payment as default information while it is still considering a hardship request, or (where it has refused one) until 14 days after telling you.

No valid default means no clearout SCI. (One caveat: this protection doesn't apply to a repeat request made on materially the same basis as one you made in the previous four months.)

5. The debt was under genuine dispute when the SCI was listed.

If you had already disputed the debt, the provider should not have listed a default or SCI while that dispute was being considered.

If you think an SCI on your report shouldn't be there, here's how to challenge it step by step:

Step 1: Get your credit reports

Request a free copy from the two credit reporting bodies: Equifax and Experian. You're entitled to a free report every three months. Check the SCI listing carefully and note the date it was listed, the credit provider who listed it, and the amount.

Step 2: Request your records from the credit provider

Ask the lender (in writing) for copies of the section 6Q notice, the section 21D notice, and the SCI warning letter they sent before listing.

Ask specifically for:

The dates each notice was sent, and the exact address it went to.
A record of every contact attempt: the phone numbers called, the email addresses used, and the dates. Section 12(5)(e) of the Credit Reporting Code requires the provider to retain this evidence, so it should be able to produce it.
What steps it took to find your current contact details once mail was returned or a number was disconnected, as section 12(5)(b) requires.

If you did forget to give the provider your new details, that isn't the end of the argument (ask what it did to find them).

Step 3: Lodge a free correction request

If the records show the listing was made in breach of the required steps, contact either the credit provider or the credit reporting body and request a correction.

Under the "no wrong door" rule, they must consult each other to resolve the issue. They have 30 days to make a decision (or to ask you for more time).

Step 4: Escalate to external dispute resolution if needed

If the correction request is refused or you don't get a response within 30 days, you can lodge a free complaint with AFCA (for banks, finance companies and BNPL providers) or the Telecommunications Industry Ombudsman. If the SCI was made by a water or energy company, you can find the details of the right external dispute resolution service for your state or territory at External dispute resolution.

These services are free, and their decisions are binding on the lender.

You don't need to pay a credit repair company for any of these steps. Everything in the correction and complaints process is free.

How long does a serious credit infringement stay on your credit report?

As mentioned, seven years from the date it's listed (two years longer than a standard default). If you pay a clearout SCI, the credit reporting body is required to remove the SCI entry and revert it to a paid default, which then follows the standard five-year retention from the original default date.

Our guide to what stays on a credit report has the full breakdown of retention periods for every type of listing.

If you need support, CreditSmart's helpful services page lists free resources, including the National Debt Helpline (1800 007 007) and financial counselling services.

View helpful services

How can you avoid a serious credit infringement?

The most reliable way to prevent an SCI is to stay contactable and act early when you're struggling with repayments.

Update your address with every credit provider when you move

Not just your bank. Your telco, your energy retailer, any BNPL accounts and old store cards too. A stale address is the single most common reason clearout SCIs get listed.

Just as important: make sure each provider has more than one way to reach you. A current mobile number, an email address you actually check, and a postal address (not just one of the three).

Providers must try phone, email, and mail before listing a clearout, and the more live contact points they have, the less likely it is that all three attempts miss you.

If you've changed your email or mobile since you opened an account, update it even if nothing is overdue.

Don’t shy away from the letters that mentions "overdue", "default" or "credit reporting"

It's a natural instinct to leave envelopes unopened, particularly when money is already tight, but the letters that sound the most alarming are usually the ones that give you time to act.

The formal notices your provider sends are a window for you to act. Remember that a section 6Q notice must come first, and a section 21D (3) notice at least 30 days later, before a default can be listed at all.

Opening the letter is often all it takes: contacting your provider at any point in those six months restarts the clock.

Ask for hardship help early

Under section 72 of the National Credit Code, you can request a variation to your repayment terms if you're experiencing financial hardship on your loans, credit cards or BNPL accounts. Telco companies also have obligations to help you if you are experiencing financial hardship.

While a hardship request is being considered, the lender can't list a default, and no default means no SCI.

Check your credit report regularly

You're entitled to a free copy of your credit report from each credit reporting body every three months. Catching an unexpected default early gives you time to act before the six-month SCI window closes.

If you need support, visit our helpful services page.

View helpful services

Frequently asked questions

Can I get a loan with a serious credit infringement?

It's difficult. Most mainstream lenders (banks, credit unions and major non-bank lenders) will decline applications while an SCI is on your report.

Some specialist lenders may consider applications with an SCI, but typically at higher interest rates and with stricter conditions.

The listing stays on your report for seven years, though paying a clearout SCI can reduce the effective duration by reverting the entry to a paid default.

Who can list a serious credit infringement in Australia?

Only entities classified as credit providers under section 6G of the Privacy Act. That includes banks, credit unions, finance companies, BNPL providers, telcos, energy retailers and consumer leasing companies.

Real estate agents, general insurers and employers can't list an SCI, and they can't access your consumer credit report either.