August 2, 2017 0

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 records your history with creditors and has a substantial effect on your future financial abilities. Possessing a ‘good’ credit report is common provided that you pay your bills and debt repayments on schedule. However, skipping a repayment on a bill or debt repayment can cause substantial complications if you want to acquire credit again down the road. In recent years, the rules have been modified to place a greater significance on affirmative history such as paying your bills on schedule, but overwhelmingly, credit reports are utilised as a way for lenders to evaluate your capabilities to repay a loan by checking for any financial mistakes you’ve made previously. If you have made some financial mistakes, how long does this information stay on your credit report? What types of financial mistakes are more serious than others? This article will take a look at these questions to give you a better understanding of how these documents work.

What Do Credit Reports Consist of

The following will provide 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 person

Credit card information

Arrears brought up to date, such as 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 probably 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 feature information such as the due date, paid date, amount, and any partial payments if applicable

Commercial credit applications for example any business or commercial loan applications

Report requests which lists all the lenders 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 impact your capacity to obtain credit in the future, so it’s imperative to recognise what constitutes a default on your credit report. If you fail to make a payment on a debt, your lending institution has the capability to report your debt to a credit reporting agency who will then register this information on your credit report. However, financial 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 implies 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 loan provider must advise you of any intents in lodging a report prior to doing so. Typically, your contract or service agreement will detail when a default can be made and reported to a credit reporting agency.

How Long Does A Default Remain On My Credit Report

The majority of the time, a credit default will stay on your credit report for five years, however if a financial institution cannot contact you because you’ve changed your telephone number and address (referred to as ‘clearout’), the penalties are more extreme and the default will continue to be on your credit report for 7 years. It is essential to keep in mind that even when you do pay an overdue debt, the default will still remain on your credit report, however the status will be updated to show that the debt has been repaid. When you apply for a loan, the lender will always examine your credit report first and if there are any defaults, the financial institution 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 report.

As you can see, credit reports are serious documents that can drastically 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 mentioned on your credit report for five years. While there are measures to improve your credit rating (like paying your bills on schedule), lending 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 in a timely manner, so if you find yourself with any financial problems and can’t pay your bills by their due date, contact Fresh Start Solutions Darwin on 1300 818 575 for help, or visit their website for additional information: https://freshstartsolutions.com.au/bankruptcy-darwin

Sources:

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

 

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