What Stays On Your Credit Report And For How Long?

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A credit report is a comprehensive document that lists your history with creditors and has a substantial effect on your future financial opportunities. Possessing a ‘good’ credit report is standard provided that you pay your bills and debt repayments on time. On the other hand, skipping a repayment on a bill or debt repayment can cause significant complications if you wish to gain credit again in the future. In recent times, the rules have been altered to place a greater significance on constructive history like paying your bills on schedule, but overwhelmingly, credit reports are utilised as a means for lenders to ascertain your abilities to repay a loan by looking for any financial oversights you’ve made before. If you have made some financial oversights, how long does this information stay on your credit report? What kinds of financial oversights are more notable than others? This blog will delve into these questions to give you a better understanding of how these documents work.

What Do Credit Reports Entail

The following will itemise the kind of information that is regularly found on your credit report:

Personal Information such as your name, DOB, address and driver’s licence details
Joint applicant details if you’ve received credit jointly with another entity
Credit card information
Arrears brought up to date, for instance, any overdue or unpaid debts that have since been repaid
Defaults and other infringements including 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 probably the most meaningful 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 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 lending institutions who have previously requested a copy of your credit report1

Credit Report Defaults

Defaults with lenders will be mentioned on your credit report and will impact your potential to receive credit in the future, so it’s significant to recognise what constitutes a default on your credit report. If you cannot make a repayment on a debt, your creditor has the capability to report your debt to a credit reporting agency who will then note this information on your credit report. But, 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 suggests the lender cannot contact you because you have changed your telephone number and address;
The debt is equal to or more than 60 days 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 notify you of any intentions in lodging a report prior to doing this. In most cases, 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 Remain On My Credit Report

Most of the time, a credit default will stay on your credit report for 5 years, however if a financial institution cannot contact you because you’ve changed your contact number and address (known as ‘clearout’), the penalties are more severe and the default will stay on your credit report for seven years. It is essential to keep in mind that even when you do pay an overdue debt, the default will continue to remain on your credit report, however the status will be updated to show that the debt has been settled. Whenever you apply for a loan, the lending institution will always check your credit report first and if there are any defaults, the lender 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 very serious documents that can drastically impact your borrowing capacity and financial flexibility. Most of the time, credit reports are either a pass or a fail, so any default, regardless of how big or small, will be recorded on your credit report for five years. Though there are measures to improve your credit rating (like paying your bills in a timely manner), 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 in a timely manner, so if you find yourself with any financial issues and can’t pay your bills by their due date, get in touch with Bankruptcy Experts Geelong on 1300 795 575 for help, or visit their website for more information: http://www.bankruptcyexpertsgeelong.com.au

Sources:

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

 

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