What Remains on Your Credit Report And For How Long?
A credit report is a specific document that lists your history with creditors and has a major effect on your future financial capabilities. Having a ‘good’ credit report is typical provided that you pay your bills and debt repayments on time. Having said that, overlooking a repayment on a bill or debt repayment can cause considerable problems if you intend to obtain credit again down the road. Not long ago, the rules have been altered to place a greater focus on positive history like paying your bills in a timely manner, but overwhelmingly, credit reports are used as a way for lenders to analyse 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 remain on your credit report? What kinds of financial oversights are more severe than others? This post will explore 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 traditionally found on your credit report:
Personal Information such as your name, address, DOB and driver’s licence details
Joint applicant details if you’ve secured credit jointly with another person
Credit card information
Arrears brought up to date, for example, any overdue or unpaid debts that have since been settled
Defaults and other infringements for example missed minimum credit card repayments and loan repayments which are over 60 days overdue
All credit applications
Debt agreements like bankruptcy, personal insolvency, and court judgements
Repayment history which is perhaps the most significant element of your credit report. It covers all credit accounts like 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 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 report1
Credit Report Defaults
Defaults with creditors will be detailed on your credit report and will have an effect on your capability to acquire credit in the future, so it’s significant to recognise 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 document this information on your credit report. Having said that, creditors can only do this if the following prerequisites 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 phone 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 creditor must advise you of any intentions in lodging a report before doing so. Often, your contract or service agreement will describe when a default can be made and reported to a credit reporting agency.
How Long Does A Default Stay On My Credit Report
In most cases, a credit default will remain on your credit report for 5 years, but if a financial institution cannot contact you because you’ve changed your contact number and address (referred to as ‘clearout’), the penalties are more serious and the default will remain on your credit report for 7 years. It is very important to mention that even when you do settle an overdue debt, the default will continue to remain on your credit report, but the status will be updated to show that the debt has been repaid. Whenever you apply for a loan, the financial institution will always evaluate 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 advise you that your application has been rejected founded on your poor credit report.
As you can see, credit reports are very serious documents that can substantially impact your borrowing capability and financial flexibility. In the majority of cases, credit reports are either a pass or a fail, so any default, despite how big or small, will be detailed on your credit report for five years. Though there are measures to improve your credit rating (for instance paying your bills on time), 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 on schedule, so if you end up with any financial problems and can’t pay your bills by their due date, contact Bankruptcy Experts Wollongong on 1300 795 575 for support, or visit their website for more details: http://www.bankruptcyexpertswollongong.com.au