Today we announced we’re launching Clear Name, a sister business to Credit Simple, which is going to give Aussies a way to clear outstanding defaults at a discount. Clear Name is an Australian first, and it’s designed to give people a chance to pay off unpaid defaults online and at their own discretion.

People will be able to access Clear Name through Credit Simple.

We reckon Aussies deserve the best shot at living a healthy financial life, so we’re calling on all credit providers to sign up to Clear Name so more people can benefit from this service.

Earlier this year, we conducted research about Aussies with outstanding debts. The research showed having unpaid defaults has personally affected 51% of people, and for 27% it affected their family. To add to that, 45% said they couldn’t get a loan because of the default  –  so it really pays to clear up unpaid defaults to help you get access to credit in the future.

Credit Simple CEO David Scognamiglio said Clear Name was designed to give people the tools to manage their unpaid defaults themselves. A default happens when a payment to a credit account is at least 60 days overdue.

“It takes just one missed payment to affect your credit score, which means it may be harder to get credit in the future – and that’s often just when you need it most,” Mr Scognamiglio said. “Having unpaid debt can create huge stress for people, so we built Clear Name to help consumers manage their debt position, and pay their defaults in a private and hassle-free way.

“We believe Clear Name changes the way consumers pay defaults, by giving the control back to consumers, empowering them with access to a discount and to clear their unpaid defaults once and for all.”

People will be able to use Clear Name through the CreditSimple.com.au site, and it’s completely free, with no obligation at any time. Even if consumers are not in a position to pay off the default immediately, they can go online, check their Clear Name position, find out what they owe, and see the potential discount, without any obligation to carry through with a payment.

Debt affects people in many ways, according to research we commissioned. The effects of debt are wide-ranging, with 50.8% of people saying it affected them personally and 26.9% saying it affected their family. Many Aussies find it difficult to get credit after they’ve had a debt go to a debt collector – 44.6% couldn’t get a loan, 18.7% couldn’t get a mobile phone on contract, and 11.5% found it difficult to get an essential service, such as electricity, gas or home phone.

Many cut back on essential purchases such as food, education or housing (52.6%) and 51.6% wisely cut back on non-essential purchases, such as entertainment or drinks, while 27.3% found themselves in a position where they had to sell something to clear the debt.

Facing up to the debt as soon as you know you have it is the best way to go, Mr Scognamiglio says. “It’s easy to stick your head in the sand when you can’t pay a bill, or if you’ve forgotten about it and suddenly had a sharp reminder.”

“Leaving all those envelopes unopened or sneaking around to avoid the debt collector isn’t going to make your money problems go away. Leaving it just makes the situation worse. The only way for things to get better is to take action.

“It’s also clear that having unpaid debt really stresses out a lot of Aussies. We asked people about their motivation for paying off the debt, and while many simply didn’t want the money owing in their name (62.6%), there’s a big chunk of people who knew their credit history would be affected (44.6%) and they wanted to avoid having a black mark on their credit file. Meanwhile 39.1 per cent of people found the situation stressful and wanted to resolve it to reduce the stress.

“And while many people were motivated to get rid of unpaid debt for the sake of their credit file, there’s still a large section of Aussies (20.3%) who said they didn’t know how debt affected their ability to get credit. That’s a worry, because having an outstanding debt is actually one of the most easily resolved black marks you can have on your credit file, but leaving it there looks really bad when you’re asking companies for credit. It’s best to clean up any unpaid bills straight away.

“We recommend people check if they have any outstanding defaults for free at CreditSimple.com.au, and check out Clear Name.”

*The research was conducted by external research company Pure Profile in August 2017 on more than 1,000 people, adjusted according to Australian demographics, all of whom were selected because they reported owing a debt to a debt collector in the past five years.