Every week, Australians scrape together thousands of dollars to pay off old debts — believing it will clean up their credit file. They sacrifice, they budget, they hand over the money. And then nothing changes. The default stays. The loan rejection stays. That’s because paying debt does not remove a default from your credit file. It’s one of the most expensive mistakes in personal finance.

Why Paying the Debt Changes Almost Nothing

When you pay off a defaulted debt, the listing status changes from “unpaid” to “paid.” That’s it. The default itself remains on your credit file for five full years from the date it was originally listed. The black mark stays. Your credit score barely moves. And lenders still see a consumer who defaulted.

This is why people who “do the right thing” and pay up are so often devastated. They expected the problem to disappear. But the system doesn’t work that way.

What Actually Removes a Default

The only thing that removes a default before the five-year expiry is proving the creditor didn’t follow the rules when they listed it. Under the Privacy Act’s credit reporting code, creditors must follow a strict process before listing a default — including sending proper written notices with specific timeframes and hardship information.

After 16 years reviewing credit files, MyCRA Lawyers has found that 9 out of 10 defaults contain a compliance issue the creditor hopes you never discover. When that happens, the default isn’t just “paid” — it’s removed entirely. As if it was never there.

Don’t Throw Money at a Problem That Has a Legal Solution

MyCRA Lawyers is a law firm with a 91.6% audited success rate at removing defaults. When a creditor has failed to comply with the Privacy Act, the default is invalid — regardless of whether you owe the money. That’s the law.

With 1 in 3 cases resolved in just 7 days, many Australians discover their default can be wiped clean faster than they imagined — and without paying thousands to a creditor for a problem that was the creditor’s fault in the first place.

The bottom line: before you pay off an old debt hoping it will fix your credit, talk to a credit repair lawyer first. You may not need to pay a cent — because the default itself may be invalid.