A credit report is an in-depth document that lists your history with creditors and has a considerable effect on your future financial opportunities. Possessing a ‘good’ credit report is basic so long as you pay your bills and debt repayments on schedule. On the other hand, overlooking a repayment on a bill or debt repayment can cause serious complications if you want to secure credit again in the future. In recent years, the rules have been modified to place a greater significance on favourable history like paying your bills on schedule, but overwhelmingly, credit reports are used as a means for lenders to examine your capabilities to repay a loan by looking for any financial errors you’ve made before. If you have made some financial errors, how long does this information remain on your credit report? What types of financial oversights are more notable than others? This post will investigate these questions to give you a better understanding of how these documents work.
What Do Credit Reports Entail
The following will specify the type of information that is usually found on your credit report:
Personal Information for instance your name, DOB, address and driver’s licence details
Joint applicant details if you’ve secured 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 probably the most meaningful factor 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 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 lenders will be listed on your credit report and will affect your ability to attain credit down the road, so it’s critical to comprehend what constitutes a default on your credit report. If you fail to make a repayment 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. But, lending institutions can only do this if the following conditions 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 loan provider must notify you of any intentions in lodging a report before doing so. Traditionally, your contract or service agreement will stipulate 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 five years, however if a lending institution cannot contact you because you’ve changed your phone number and address (also known as ‘clearout’), the penalties are more harsh and the default will continue to be on your credit report for seven years. It’s important to note that even when you do settle an overdue debt, the default will still stay on your credit report, but the status will be updated to reflect that the debt has been settled. Every time you apply for a loan, the loan provider will always examine your credit report first and if there are any defaults, the loan provider 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 dramatically impact your borrowing capability and financial flexibility. The majority of the time, credit reports are either a pass or a fail, so any default, despite how big or small, will be posted on your credit report for five years. While 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 end up with any financial complications and can’t pay your bills by their due date, reach out to Bankruptcy Experts Darwin on 1300 795 575 for help, or visit their website for more information: www.bankruptcyexpertsdarwin.com.au