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What Stays On Your Credit Report And For How Long?

What Stays On Your Credit Report And For How Long?

A credit report is a detailed document that records your history with creditors and has a notable effect on your future financial capabilities. Possessing a ‘good’ credit report is standard 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 issues if you intend to obtain credit again down the road. Not long ago, the rules have been changed to place a greater focus on affirmative history like paying your bills in a timely manner, but overwhelmingly, credit reports are utilised as a means for lenders to ascertain your capabilities to repay a loan by checking for any financial oversights you’ve made previously. If you have made some financial mistakes, how long does this information remain on your credit report? What kinds of financial oversights are more drastic 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 list the type of information that is commonly found on your credit report:

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

Joint applicant details if you’ve secured credit jointly with another entity

Credit card information

Arrears brought up to date, such as any overdue or unpaid debts that have since been settled

Defaults and other infringements for instance missed minimum credit card repayments and loan repayments which are more than 60 days overdue

All credit applications

Debt agreements for instance bankruptcy, personal insolvency, and court judgements

Repayment history which is perhaps the most important 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 part payments if applicable

Commercial credit applications such as any business or commercial loan applications

Report requests which lists all the lenders who have previously requested a copy of your credit report

Credit Report Defaults

Defaults with lenders will be detailed on your credit report and will impact your capacity to acquire credit in the future, so it’s necessary to recognise what constitutes a default on your credit report. If you fail to make a repayment on a debt, your lender has the ability to report your debt to a credit reporting agency who will then register this information on your credit report. With that being said, creditors can only do this if the following rules apply:

The default amount is $150 or more;

You’re a ‘confirmed missing debtor’ or ‘clearout’ which indicates 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 asked 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 intents in lodging a report prior to doing this. Usually, 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 Stay On My Credit Report

For the most parts, a credit default will stay on your credit report for five years, but if a financial institution cannot contact you because you’ve changed your contact number and address (also known as ‘clearout’), the penalties are more serious and the default will remain on your credit report for seven years. It is necessary to keep in mind that even when you do settle an overdue debt, the default will nonetheless remain on your credit report, however the status will be updated to reflect that the debt has been paid. Each time you make an application for a loan, the lending institution will always check your credit report first and if there are any defaults, the lending institution can reject such loan applications. If this is the case, the lender must advise you that your application has been rejected based on your poor credit history.

As you can see, credit reports are serious documents that can notably impact your borrowing capacity and financial flexibility. In the majority of cases, credit reports are either a pass or a fail, so any default, irrespective of how big or small, will be detailed on your credit report for five years. Although there are measures to improve your credit rating (such as paying your bills on time), lenders are really only interested in any defaults on your credit report and can reject a loan application based on 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 difficulties and can’t pay your bills by their due date, speak to Bankruptcy Experts Cassowary Coast on 1300 795 575 for support, or visit their website for more details: