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What Stays On Your Credit Report And For How Long

What Remains on Your Credit Report And For How Long?

A credit report is a specific document that details your history with creditors and has a major effect on your future financial abilities. Possessing a ‘good’ credit report is standard provided that you pay your bills and debt repayments on schedule. However, overlooking a repayment on a bill or debt repayment can cause substantial issues if you intend to gain credit again down the road. Recently, the rules have been changed 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 determine your abilities to repay a loan by looking for any financial mistakes you’ve made previously. If you have made some financial mistakes, how long does this information stay on your credit report? What types of financial errors are more notable than others? This post will take a look at these questions to give you a better understanding of how these documents work.

 

What Do Credit Reports Consist of

 

The following will provide 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 secured credit jointly with another entity

Credit card information

Arrears brought up to date, for example, any overdue or unpaid debts that have since been repaid

Defaults and other infringements such as missed minimum credit card repayments and loan repayments which are greater than 60 days overdue

All credit applications

Debt agreements such as bankruptcy, personal insolvency, and court judgements

Repayment history which is likely the most crucial element of your credit report. It covers all credit accounts like home loans, car loans, personal loans and credit card loans. Any missed repayments will include information such as the due date, paid date, amount, and any part payments if applicable

Commercial credit applications for example any business or commercial loan applications

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

 

Credit Report Defaults

 

Defaults with lenders will be detailed on your credit report and will have an effect on your capacity to attain credit down the road, so it’s significant to comprehend what constitutes a default on your credit report. If you cannot make a repayment on a debt, your financial institution has the ability to report your debt to a credit reporting agency who will then register this information on your credit report. But, loan providers 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 implies the lender cannot contact you because you have changed your telephone number and address;

The debt is equal to or more than 60 days overdue; and

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

 

Your lender must notify you of any intentions in lodging a report before doing this. In most cases, your contract or service agreement will state when a default can be made and reported to a credit reporting agency.

 

How Long Does A Default Stay On My Credit Report

 

The majority of the time, a credit default will remain on your credit report for 5 years, however if a lending institution cannot contact you because you’ve changed your telephone number and address (referred to as ‘clearout’), the penalties are more harsh and the default will stay on your credit report for seven years. It’s important to keep in mind that even when you do pay an overdue debt, the default will still remain on your credit report, but the status will be updated to reflect that the debt has been repaid. Any time you make an application for a loan, the creditor will always assess your credit report first and if there are any defaults, the lender can reject such loan applications. If this is the case, the lender must inform you that your application has been rejected founded 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. Most of the time, credit reports are either a pass or a fail, so any default, irrespective of how big or small, will be posted on your credit report for five years. Even though there are measures to improve your credit rating (for instance 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 on a single default. If anything, this article highlights the importance of paying your bills and debt repayments on time, so if you end up with any financial problems and can’t pay your bills by their due date, get in touch with Bankruptcy Experts Canberra on 1300 795 575 for support, or visit their website for additional information: http://www.bankruptcyexpertscanberra.com.au

 

Sources:

 

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