We are often asked if negative credit issues such as defaults can be removed on compassionate grounds.
This is an interesting question as you will no doubt get different answers depending on who you ask.
Before I start, I think it is important to note the view of the credit reporting agencies on this topic, such as Equifax. As far as these agencies are concerned, negative credit listings such as defaults can only be removed if they have been made in error or the credit provider that listed the item did not follow the necessary process. In other words, the official view is that negative credit listings cannot be removed on compassionate grounds. However there are always exceptions.
Removing defaults on compassionate grounds
Compassionate grounds can mean a great many things. Someone that has lost their job or had a failed business and ended up with a default recorded on their credit file may say it should be removed on compassionate grounds. Another person may think that as they have been involved in a separation or divorce and inherited debts they have been unable to service, they should also be eligible for leniency and their credit file restored on compassionate grounds.
While these examples are no doubt traumatic to the person involved and it does seem tough that people’s credit files can be negatively affected when the circumstances that coursed late payments on their accounts were out of their control, the unfortunate truth is that very few credit listings can be removed under such circumstances.
While the credit reporting agencies have a view that negative credit listings cannot be removed solely on the grounds of compassion, the truth is credit providers do have the power to request credit listings such as defaults be removed given they feel such a request is warranted.
While the above examples are unlikely to produce compassion from a credit provider, genuine cases of true hardship can often motivate a credit provider to request the removal of a credit listing.
As one of Australia’s leading credit repair companies, we have spoken to many people that have been affected by tragedy, such as serious illness or deaths in the family that have genuinely affected their ability to maintain commitments. It seems unnecessary hard for such people to not be able to secure credit for years after such an event due to a default or a negative credit listing. This can make the recovery from traumatic events all that much harder and prolonged. This in my opinion is morally wrong.
In our experience, given the events of the genuine hardship can be substantiated, many credit providers will be understanding and can agree to help by requesting the credit listing be removed from the person’s credit file.
While the recording of defaults on a credit file is designed to inform other credit providers of a potential credit risk which in many cases is justified, I do feel that there are many situations where such listings should be removed. These cases can be situation based and are not a reflection on the character of the person or their credit risk profile.