What Stays On Your Credit Report And For How Long?

A credit report is an in-depth document that shows your history with creditors and has a notable effect on your future financial capabilities. Having a ‘good’ credit report is regular so long as you pay your bills and debt repayments on schedule. However, overlooking a repayment on a bill or debt repayment can cause considerable issues if you plan to secure credit again in the future. Not long ago, the rules have been modified to place a greater importance on affirmative 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 errors you’ve made previously. If you have made some financial errors, how long does this information stay on your credit report? What types of financial mistakes are more notable than others? This post 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 itemise the kind of information that is typically found on your credit report:

 

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

Joint applicant details if you’ve obtained credit jointly with another person

Credit card information

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

Defaults and other infringements for instance 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 likely 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 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 creditors will be detailed on your credit report and will alter your ability to receive 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 repayment on a debt, your creditor has the ability to report your debt to a credit reporting agency who will then note this information on your credit report. But, lending institutions 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 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 lender must advise you of any intentions in lodging a report prior to doing so. Traditionally, your contract or service agreement will state 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 5 years, however if a creditor cannot contact you because you’ve changed your contact number and address (also known as ‘clearout’), the consequences are more extreme and the default will continue to be on your credit report for 7 years. It is very important to bear in mind that even when you do repay 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. Any time you apply for a loan, the financial institution will always review 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 advise you that your application has been rejected based on your bad credit report.

 

As you can see, credit reports are serious documents that can dramatically impact your borrowing capacity and financial flexibility. The majority 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 (such as paying your bills in a timely manner), creditors 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, reach out to Bankruptcy Experts Sydney on 1300 795 575 for assistance, or visit their website for more information: http://www.bankruptcyexpertssydney.com.au

 

Sources:

 

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