What Stays On Your Credit Report And For How Long

A credit report is a specific document that specifies your history with creditors and has a notable effect on your future financial opportunities. Possessing a ‘good’ credit report is basic as long as you pay your bills and debt repayments punctually. On the other hand, skipping a repayment on a bill or debt repayment can cause substantial problems if you wish to gain credit again in the future. In recent years, the rules have been remodelled to place a greater importance on favourable history such as paying your bills in a timely manner, but overwhelmingly, credit reports are utilised as a way for creditors to examine your capabilities 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 blog will look at these questions to give you a better understanding of how these documents work.

What Do Credit Reports Entail

The following will detail 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 acquired credit jointly with another person

Credit card information

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

Defaults and other infringements such as missed minimum credit card repayments and loan repayments which are over 60 days overdue

All credit applications

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

Repayment history which is probably the most key component 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 including any business or commercial loan applications

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

Credit Report Defaults

Defaults with lenders will be mentioned on your credit report and will impact your capability to secure credit in the future, so it’s imperative to comprehend what constitutes a default on your credit report. If you fail to make a payment on a debt, your lender has the capability to report your debt to a credit reporting agency who will then register this information on your credit report. But, lenders 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 implies the lender cannot contact you because you have changed your contact 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 lending institution must notify you of any intentions in lodging a report before doing so. Typically, 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 Remain On My Credit Report

Most of the time, a credit default will stay on your credit report for 5 years, however if a lender cannot contact you because you’ve changed your phone number and address (known as ‘clearout’), the penalties are more severe and the default will remain on your credit report for 7 years. It is necessary to note that even when you do settle an overdue debt, the default will nonetheless stay on your credit report, however the status will be updated to reflect that the debt has been repaid. When you apply for a loan, the lending institution will always review 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 inform you that your application has been rejected based upon your bad credit report.

As you can see, credit reports are serious documents that can notably impact your borrowing capability 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 mentioned on your credit report for five years. Although there are measures to improve your credit rating (like 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 time, so if you find yourself with any financial problems and can’t pay your bills by their due date, get in contact with Bankruptcy Experts on 1300 795 575 for support, or visit their website for more details: www.bankruptcyexperts.com.au