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I had a default years ago. Does it still count?

Bayley Clarke · Mortgage broker on the road · Last checked 3 September 2026 · 4 min read

The ninety second version. The rest of this page is the detail underneath it.

First, check whether it's actually there

The biggest thing for the banks is they want to understand what the history of your credit profile looks like and how these things came to be. So if there are no defaults on your credit file and you say you had a default, then the default has likely dropped off, and it's not going to affect your ability to borrow money for a home loan.

Defaults sit on your file for five years from the date they were listed, paid or not. After that they're gone, and a lender can't see what it can't see. So before you assume the worst, pull your report. Plenty of people carry a default around in their head for years after it's left the file.

Paid default still showing

If there is a default still showing on your credit report that is paid, then more than likely there are a lot of banks, depending on how long it's been since that default was paid, that will still accept you for a typical home loan, providing there are no other issues surrounding your credit report.

The bank's questions are: how big was it, how long ago, what caused it, and has anything else happened since. A $400 phone bill from four years ago, paid, with a clean file since, is a paragraph in the application and usually nothing more. A large one paid last month is a different conversation. The story matters, so have it ready and tell it straight.

Unpaid default

If it's unpaid, depending on how much that default amount is, that will dictate which lender may ultimately accept you for a home loan. Any lender that's going to take you with an unpaid default is going to have significantly higher interest rates and fees associated with it, and you're not going to be able to go to the typical banks for your mortgage.

That's the specialist lane. It exists, it works, and it's expensive, usually as a stepping stone: get in with a specialist lender, keep a clean two years, then refinance to a mainstream bank once the file has healed. But it's the last resort, not the first move.

The first move, if you have a paid or even an unpaid default and you're looking to apply, is to contact the provider that listed the default and try to work out a resolution to have it removed from your credit file. Providers do remove listings, especially where the debt was disputed, the amount was small, or the notice process wasn't followed properly. If that doesn't work, there are businesses that do exactly that for a fee for service. They'll do the dirty work of chasing the removal so it doesn't impact your ability to borrow.

Where the lines sit, by the book

Paid, small, old and non-financial is the easy band. Most mainstream lenders have a written tolerance for it, and the ceilings sit around $500 to $1,000 in total, telco or utility only, paid in full, with a short written explanation. A paid default on a loan or a credit card is a harder conversation at the majors, because that's a financial default, and a couple of lenders decline those outright regardless of size.

Unpaid is a hard no at most mainstream lenders. Past that line the specialist lenders run tiers rather than a yes or no. At the friendlier end, a default up to about $3,000, paid or unpaid, still fits a near prime product. Bigger ones fit if they were listed more than 12 or 24 months ago. At the far end there are products built for a fresh credit event inside the last year, and you pay for them in rate and fees, which is the part he mentions on camera.

Age matters as much as size. At least two lenders won't touch any default inside the last 24 months no matter the amount. Several treat anything listed more than two years ago as effectively spent, even if it's unpaid. And defaults aren't the only thing on the file: the repayment history codes next to each loan count too, and a 3 or higher in the last 24 months can end an application at a major with no default anywhere.