August 2, 2017 0

What Stays On Your Credit Report And For How Long?

Posted by:Charles Bosse onAugust 2, 2017

Declaring Bankruptcy,Bankruptcy Sydney, Bankruptcy Advice

A credit report is an in-depth document that lists your history with creditors and has a substantial effect on your future financial abilities. Having a ‘good’ credit report is basic provided that you pay your bills and debt repayments in a timely manner. On the other hand, overlooking a repayment on a bill or debt repayment can cause serious complications if you want to gain credit again in the future. A while ago, the rules have been adjusted to place a greater focus on favourable history like 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 checking for any financial errors you’ve made in the past. If you have made some financial mistakes, how long does this information stay on your credit report? What kinds of financial mistakes are more severe than others? This article will investigate these questions in order to give you a better understanding of how these documents work.

What Do Credit Reports Entail

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

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

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 for example missed minimum credit card repayments and loan repayments which are greater than 60 days overdue

All credit applications

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

Repayment history which is perhaps the most crucial aspect 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 part payments if applicable

Commercial credit applications such as any business or commercial loan applications

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

Credit Report Defaults

Defaults with creditors will be noted on your credit report and will alter your capacity to acquire credit down the road, so it’s very important to understand what constitutes a default on your credit report. If you fail to make a payment on a debt, your lending institution has the ability to report your debt to a credit reporting agency who will then register this information on your credit report. However, lending institutions can only do this if the following prerequisites 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 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 intents in lodging a report prior to doing this. Typically, 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 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 telephone number and address (referred to as ‘clearout’), the consequences are more severe and the default will stay on your credit report for 7 years. It’s important to note that even when you do settle an overdue debt, the default will still remain on your credit report, but the status will be updated to show that the debt has been settled. Any time you make an application for a loan, the creditor 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 bad credit history.

As you can see, credit reports are serious documents that can drastically impact your borrowing capacity and financial flexibility. In many cases, credit reports are either a pass or a fail, so any default, irrespective of how big or small, will be mentioned on your credit report for five years. Whilst there are measures to improve your credit rating (such as 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 upon a single default. If anything, this article highlights the importance of paying your bills and debt repayments on time, so if you find yourself with any financial challenges and can’t pay your bills by their due date, contact Fresh Start Solutions Sydney on 1300 818 575 for support, or visit their website for additional information: http://freshstartsolutions.com.au/bankruptcy-sydney

 

Sources:

 

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

 

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