A credit report is an in-depth document that lists your history with creditors and has a considerable effect on your future financial abilities. Possessing 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 problems if you need to secure credit again down the road. Not long ago, the rules have been modified to place a greater emphasis on desirable history like paying your bills on schedule, but overwhelmingly, credit reports are utilised as a way for lenders to analyse your abilities to repay a loan by checking for any financial errors you’ve made in the past. If you have made some financial oversights, how long does this information remain on your credit report? What kinds of financial oversights are more serious than others? This blog will investigate these questions in order to give you a better understanding of how these documents work.
What Do Credit Reports Consist of
The following will specify the type of information that is usually found on your credit report:
Personal Information including your name, address, DOB and driver’s licence details
Joint applicant details if you’ve acquired 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 over 60 days overdue
All credit applications
Debt agreements for example bankruptcy, personal insolvency, and court judgements
Repayment history which is perhaps the most important element 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 partial payments if applicable
Commercial credit applications for instance any business or commercial loan applications
Report requests which lists all the creditors 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 have an effect on your potential to receive credit in the future, so it’s essential to recognise what constitutes a default on your credit report. If you cannot make a repayment on a debt, your lender has the ability to report your debt to a credit reporting agency who will then note this information on your credit report. Having said that, financial institutions can only do this if the following terms apply:
The default amount is $150 or more;
You’re a ‘confirmed missing debtor’ or ‘clearout’ which means 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 requested 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 advise you of any intentions in lodging a report before doing so. Frequently, your contract or service agreement will outline 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, however if a loan provider cannot contact you because you’ve changed your phone number and address (also known as ‘clearout’), the consequences are more serious and the default will remain on your credit report for seven years. It is very important to keep in mind that even when you do repay an overdue debt, the default will nevertheless stay on your credit report, but the status will be updated to show that the debt has been repaid. Each time you apply for a loan, the lending institution will always assess 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 notify you that your application has been rejected founded on your bad credit history.
As you can see, credit reports are very serious documents that can significantly impact your borrowing capacity 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 mentioned 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 time, so if you end up with any financial complications and can’t pay your bills by their due date, speak with Bankruptcy Experts Tennant Creek on 1300 795 575 for assistance, or visit their website for additional information: http://www.bankruptcyexpertstennantcreek.com.au