August 8, 2017Comments Closed

What Remains on Your Credit Report And For How Long?

Posted by:admin onAugust 8, 2017

Bankruptcy Experts Mount Isa

A credit report is an in-depth document that records your history with creditors and has a notable effect on your future financial capabilities. Possessing a ‘good’ credit report is conventional provided that you pay your bills and debt repayments in a timely manner. Having said that, overlooking a repayment on a bill or debt repayment can cause substantial problems if you wish to gain credit again in the future. Not long ago, the rules have been remodelled to place a greater emphasis on affirmative history such as paying your bills on schedule, but overwhelmingly, credit reports are utilised as a means for lenders to ascertain your capabilities to repay a loan by looking for any financial mistakes you’ve made in the past. If you have made some financial errors, how long does this information stay on your credit report? What kinds of financial errors are more serious than others? This blog will examine these questions to give you a better understanding of how these documents work.

What Do Credit Reports Consist of

The following will itemise the type of information that is usually found on your credit report:

Personal Information for instance 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, such as any overdue or unpaid debts that have since been settled

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

All credit applications

Debt agreements such as bankruptcy, personal insolvency, and court judgements

Repayment history which is perhaps the most significant factor 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 include information such as the due date, paid date, amount, and any part payments if applicable

Commercial credit applications for example any business or commercial loan applications

Report requests which lists all the financial institutions 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 have an effect on your capability to attain credit down the road, so it’s paramount to recognise what constitutes a default on your credit report. If you fail to make a payment on a debt, your financial institution has the capability to report your debt to a credit reporting agency who will then register this information on your credit report. Having said that, lending institutions can only do this if the following terms apply:

The default amount is equal to or more than $150;

You’re a ‘confirmed missing debtor’ or ‘clearout’ which signifies 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 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 advise you of any intents in lodging a report prior to doing so. In most cases, 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

The majority of the time, a credit default will remain on your credit report for 5 years, but 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 remain on your credit report for 7 years. It is very important to keep in mind that even when you do pay an overdue debt, the default will nonetheless stay on your credit report, but the status will be updated to show that the debt has been paid. Every time you apply for a loan, the creditor will always review 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 notify you that your application has been rejected based upon your poor credit history.

As you can see, credit reports are serious documents that can substantially impact your borrowing capability and financial flexibility. In most cases, credit reports are either a pass or a fail, so any default, regardless of how big or small, will be specified on your credit report for five years. Even though there are measures to improve your credit rating (for example paying your bills on schedule), lending institutions 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 on schedule, so if you end up with any financial complications and can’t pay your bills by their due date, get in contact with Bankruptcy Experts Mount Isa on 1300 795 575 for assistance, or visit their website for more details: http://www.bankruptcyexpertsmountisa.com.au

Sources:

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

 

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