August 2, 20170

What Remains on Your Credit Report And For How Long?

Posted by:Charles Bosse onAugust 2, 2017

A credit report is an in-depth document that contains your history with creditors and has a considerable effect on your future financial opportunities. Possessing a ‘good’ credit report is typical provided that you pay your bills and debt repayments on schedule. However, skipping a repayment on a bill or debt repayment can cause serious issues if you wish to receive credit again down the road. Not long ago, the rules have been modified to place a greater significance on favourable history such as paying your bills in a timely manner, but overwhelmingly, credit reports are utilised as a means for creditors to determine your capabilities to repay a loan by looking for any financial oversights you’ve made before. If you have made some financial errors, how long does this information stay on your credit report? What types of financial mistakes are more drastic 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 Consist of

 

The following will detail the kind of information that is usually found on your credit report:

 

Personal Information for instance your name, DOB, address and driver’s licence details

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

Credit card information

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

Defaults and other infringements for example 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 likely the most critical factor 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 part 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 noted on your credit report and will have an effect on your ability to receive credit down the road, so it’s essential to understand what constitutes a default on your credit report. If you cannot make a payment on a debt, your lender has the ability 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 means the lender cannot contact you because you have changed your telephone 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 lending institution must inform you of any intents in lodging a report before doing so. Normally, 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 Stay On My Credit Report

 

In the majority of cases, a credit default will stay on your credit report for five years, however if a loan provider cannot contact you because you’ve changed your telephone number and address (also known as ‘clearout’), the penalties are more extreme and the default will continue to be on your credit report for seven years. It is essential to note that even when you do pay an overdue debt, the default will nonetheless stay on your credit report, but the status will be updated to reflect that the debt has been settled. Each time you make an application for a loan, the financial institution will always look at 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 inform you that your application has been rejected based on your poor credit report.

 

As you can see, credit reports are serious documents that can dramatically impact your borrowing capacity and financial flexibility. In many cases, credit reports are either a pass or a fail, so any default, regardless of how big or small, will be specified on your credit report for five years. Although there are measures to improve your credit rating (for example paying your bills in a timely manner), lenders 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 on schedule, so if you find yourself with any financial complications and can’t pay your bills by their due date, speak with Fresh Start Solutions Brisbane on 1300 818 575 for assistance, or visit their website for more details: http://freshstartsolutions.com.au/bankruptcy-brisbane

 

Sources:

 

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

 

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