What Remains on Your Credit Report And For How Long?

 

A credit report is a comprehensive document that details your history with creditors and has a substantial effect on your future financial opportunities. Possessing a ‘good’ credit report is regular provided that you pay your bills and debt repayments on time. Having said that, overlooking a repayment on a bill or debt repayment can cause significant complications if you wish to secure credit again in the future. In recent years, the rules have been remodelled to place a greater focus on desirable history like paying your bills in a timely manner, but overwhelmingly, credit reports are used as a means for creditors to evaluate your abilities to repay a loan by looking for any financial oversights you’ve made previously. If you have made some financial errors, how long does this information stay on your credit report? What kinds of financial oversights are more serious than others? This post will look at these questions in order to give you a better understanding of how these documents work.

 

What Do Credit Reports Entail

 

The following will specify the kind of information that is traditionally found on your credit report:

 

Personal Information such as your name, address, DOB and driver’s licence details

Joint applicant details if you’ve obtained credit jointly with another person

Credit card information

Arrears brought up to date, such as any overdue or unpaid debts that have since been settled

Defaults and other infringements for instance missed minimum credit card repayments and loan repayments which are in excess of 60 days overdue

All credit applications

Debt agreements like bankruptcy, personal insolvency, and court judgements

Repayment history which is perhaps the most key factor of your credit report. It covers all credit accounts such as home loans, car loans, personal loans and credit card loans. Any missed repayments will contain information such as the due date, paid date, amount, and any partial payments if applicable

Commercial credit applications including any business or commercial loan applications

Report requests which lists all the financial institutions who have previously requested a copy of your credit report1

 

Credit Report Defaults

 

Defaults with lenders will be posted on your credit report and will impact your potential to attain credit in the future, so it’s important to understand what constitutes a default on your credit report. If you cannot make a repayment on a debt, your lender has the ability to report your debt to a credit reporting agency who will then register this information on your credit report. With that being said, lending institutions can only do this if the following terms apply:

 

The default amount is equal to or more than $150;

You’re a ‘confirmed missing debtor’ or ‘clearout’ which suggests the lender cannot contact you because you have changed your phone number and address;

The debt is 60 days or more overdue; and

The lender has requested you to pay the debt by either sending you written notice in the mail, or by asking you over the phone1

 

Your lender must inform you of any intentions in lodging a report prior to doing this. Often, your contract or service agreement will stipulate when a default can be made and reported to a credit reporting agency.

 

How Long Does A Default Stay On My Credit Report

 

In most cases, a credit default will stay on your credit report for 5 years, although if a lender cannot contact you because you’ve changed your telephone number and address (referred to as ‘clearout’), the penalties are more extreme and the default will stay on your credit report for 7 years. It is very important to bear in mind that even when you do settle an overdue debt, the default will nonetheless remain on your credit report, but the status will be updated to show that the debt has been paid. When you apply for a loan, the loan provider will always check your credit report first and if there are any defaults, the loan provider can reject such loan applications. If this is the case, the lender must notify you that your application has been rejected based on your poor credit report.

 

As you can see, credit reports are very serious documents that can significantly impact your borrowing capacity and financial flexibility. The majority of the time, credit reports are either a pass or a fail, so any default, despite how big or small, will be posted on your credit report for five years. Though there are measures to improve your credit rating (for example paying your bills on schedule), loan providers are really only interested in any defaults on your credit report and can reject a loan application based upon a single default. If anything, this article highlights the importance of paying your bills and debt repayments in a timely manner, so if you end up with any financial challenges and can’t pay your bills by their due date, speak to Bankruptcy Experts Ipswich on 1300 795 575 for support, or visit their website for more information: http://www.bankruptcyexpertsipswich.com.au

 

Sources:

 

https://www.moneysmart.gov.au/borrowing-and-credit/borrowing-basics/credit-reports