What Stays On Your Credit Report And For How Long?

A credit report is a specific document that details your history with creditors and has a notable effect on your future financial abilities. Having a ‘good’ credit report is normal so long as you pay your bills and debt repayments in a timely manner. Having said that, missing a repayment on a bill or debt repayment can cause significant issues if you need to secure credit again in the future. Not long ago, the rules have been remodelled to place a greater focus on favourable history like paying your bills on schedule, but overwhelmingly, credit reports are utilised as a means for creditors to analyse your abilities to repay a loan by checking for any financial oversights you’ve made previously. If you have made some financial oversights, how long does this information stay on your credit report? What types of financial mistakes are more notable than others? This post will explore these questions so as 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 commonly found on your credit report:

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

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

Credit card information

Arrears brought up to date, such as 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 more than 60 days overdue

All credit applications

Debt agreements for example bankruptcy, personal insolvency, and court judgements

Repayment history which is likely the most critical 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 feature 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 financial institutions who have previously requested a copy of your credit report1

Credit Report Defaults

Defaults with lenders will be noted on your credit report and will alter your capacity to receive credit down the road, so it’s important to understand what constitutes a default on your credit report. If you fail to make a payment on a debt, your creditor has the capability to report your debt to a credit reporting agency who will then document this information on your credit report. Having said that, lenders can only do this if the following rules 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 phone 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 lending institution must inform you of any intentions in lodging a report prior to doing this. Frequently, 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

Most of the time, a credit default will stay on your credit report for five years, although if a lending institution cannot contact you because you’ve changed your contact 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 is essential to keep in mind that even when you do pay an overdue debt, the default will continue to stay on your credit report, however the status will be updated to reflect that the debt has been paid. Each time you make an application for a loan, the financial institution will always check 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 based upon your poor credit history.

As you can see, credit reports are serious documents that can greatly impact your borrowing capability and financial flexibility. Most of the time, credit reports are either a pass or a fail, so any default, regardless of how big or small, will be recorded on your credit report for five years. Although there are measures to improve your credit rating (such as paying your bills in a timely manner), creditors 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 find yourself with any financial troubles and can’t pay your bills by their due date, contact Bankruptcy Experts Port Macquarie on 1300 795 575 for help, or visit their website for more details: http://www.bankruptcyexpertsportmacquarie.com.au

Sources:

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

 

By | 2017-11-15T02:49:16+00:00 August 7th, 2017|Bankrupt, blog|0 Comments

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