What Stays On Your Credit Report And For How Long?

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A credit report is a comprehensive document that shows your history with creditors and has a significant effect on your future financial opportunities. Possessing a ‘good’ credit report is basic as long as you pay your bills and debt repayments in a timely manner. However, skipping a repayment on a bill or debt repayment can cause substantial complications if you wish to secure credit again in the future. In recent times, the rules have been altered to place a greater emphasis on desirable history like paying your bills in a timely manner, but overwhelmingly, credit reports are used as a means for lenders to determine your capabilities to repay a loan by checking for any financial errors you’ve made before. If you have made some financial oversights, how long does this information stay on your credit report? What types of financial errors are more drastic than others? This blog will examine these questions in order to give you a better understanding of how these documents work.

What Do Credit Reports Consist of

The following will list the type of information that is typically found on your credit report:

Personal Information such as your name, DOB, address 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 settled

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 instance bankruptcy, personal insolvency, and court judgements

Repayment history which is likely the most important component of your credit report. It covers all credit accounts like 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 partial payments if applicable

Commercial credit applications including any business or commercial loan applications

Report requests which lists all the lenders who have previously requested a copy of your credit report

Credit Report Defaults

Defaults with lenders will be listed on your credit report and will impair your capability to acquire credit in the future, so it’s vital to comprehend what constitutes a default on your credit report. If you fail to make a repayment on a debt, your lending institution has the capability to report your debt to a credit reporting agency who will then note this information on your credit report. But, lending institutions can only do this if the following rules apply:

The default amount is $150 or more;

You’re a ‘confirmed missing debtor’ or ‘clearout’ which indicates the lender cannot contact you because you have changed your contact 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 phone

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

How Long Does A Default Remain On My Credit Report

In most cases, a credit default will remain on your credit report for 5 years, however if a financial institution cannot contact you because you’ve changed your phone number and address (referred to as ‘clearout’), the penalties are more extreme and the default will remain on your credit report for 7 years. It’s important to mention 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 reflect that the debt has been settled. Whenever you apply for a loan, the financial institution 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 notify you that your application has been rejected founded on your poor credit history.

As you can see, credit reports are very serious documents that can substantially impact your borrowing capability and financial flexibility. In most cases, credit reports are either a pass or a fail, so any default, regardless of how big or small, will be posted on your credit report for five years. Although there are measures to improve your credit rating (like paying your bills on time), financial institutions 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 in a timely manner, so if you find yourself with any financial troubles and can’t pay your bills by their due date, speak with Bankruptcy Experts Penrith on 1300 795 575 for help, or visit their website for more information: https://www.bankruptcyexpertspenrith.com.au

Sources:

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

 

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