August 2, 20170

What Stays On Your Credit Report And For How Long?

Posted by:Charles Bosse onAugust 2, 2017

A credit report is a comprehensive document that details your history with creditors and has a notable effect on your future financial capabilities. Having a ‘good’ credit report is normal as long as you pay your bills and debt repayments punctually. Having said that, missing a repayment on a bill or debt repayment can cause considerable issues if you need to gain credit again in the future. In recent years, the rules have been modified to place a greater importance on positive history like paying your bills on time, but overwhelmingly, credit reports are utilised as a way for lenders to evaluate your capabilities to repay a loan by checking for any financial errors you’ve made previously. If you have made some financial oversights, how long does this information stay on your credit report? What kinds of financial mistakes are more serious than others? This post will examine these questions so as to give you a better understanding of how these documents work.

What Do Credit Reports Entail

The following will provide the kind of information that is traditionally found on your credit report:

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

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

Credit card information

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

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 like bankruptcy, personal insolvency, and court judgements

Repayment history which is likely the most significant element 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 include 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 mentioned on your credit report and will impact your ability to attain credit in the future, so it’s significant to comprehend what constitutes a default on your credit report. If you cannot make a payment on a debt, your loan provider has the capability to report your debt to a credit reporting agency who will then register this information on your credit report. However, creditors can only do this if the following terms apply:

The default amount is $150 or more;

You’re a ‘confirmed missing debtor’ or ‘clearout’ which implies the lender cannot contact you because you have changed your contact 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 prior to doing this. Often, 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

The majority of the time, a credit default will stay on your credit report for 5 years, but if a lender cannot contact you because you’ve changed your contact number and address (known as ‘clearout’), the penalties are more serious and the default will remain on your credit report for seven years. It is essential to keep in mind that even when you do settle an overdue debt, the default will nevertheless stay on your credit report, but the status will be updated to show that the debt has been settled. Whenever you apply for a loan, the lending institution will always look at your credit report first and if there are any defaults, the lending institution 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 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, despite how big or small, will be mentioned on your credit report for five years. Even though there are measures to improve your credit rating (for example paying your bills on schedule), creditors 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 issues and can’t pay your bills by their due date, call Fresh Start Solutions Adelaide on 1300 818 575 for assistance, or visit their website for additional information: https://freshstartsolutions.com.au/bankruptcy-adelaide

Sources:

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

 

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