What Stays On Your Credit Report And For How Long?

What Stays On Your Credit Report And For How Long?

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A credit report is an in-depth document that contains your history with creditors and has a significant effect on your future financial abilities. Having a ‘good’ credit report is normal provided that you pay your bills and debt repayments punctually. On the other hand, overlooking a repayment on a bill or debt repayment can cause substantial issues if you want to obtain credit again in the future. A while ago, the rules have been adjusted to place a greater significance on favourable history like paying your bills on schedule, but overwhelmingly, credit reports are used as a way for creditors to assess your capabilities to repay a loan by checking for any financial oversights you’ve made in the past. If you have made some financial errors, how long does this information remain on your credit report? What kinds of financial mistakes are more serious than others? This blog will examine these questions in order to give you a better understanding of how these documents work.

What Do Credit Reports Entail

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

Personal Information for example your name, DOB, driver’s licence details and address
Joint applicant details if you’ve received credit jointly with another person
Credit card information
Arrears brought up to date, for example, 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 more than 60 days overdue
All credit applications
Debt agreements like bankruptcy, personal insolvency, and court judgements
Repayment history which is likely the most critical component 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 contain 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 lending institutions who have previously requested a copy of your credit report1

Credit Report Defaults

Defaults with lenders will be noted on your credit report and will impair your capacity to receive credit in the future, so it’s important to comprehend what constitutes a default on your credit report. If you fail to make a repayment on a debt, your lender has the capability to report your debt to a credit reporting agency who will then document 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 telephone number and address;
The debt is 60 days or more 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 inform you of any intents in lodging a report before doing this. Often, 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 stay on your credit report for five years, although if a lending institution cannot contact you because you’ve changed your contact number and address (referred to as ‘clearout’), the consequences are more harsh and the default will remain on your credit report for seven years. It’s important to keep in mind that even when you do pay 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 paid. Every time you apply for a loan, the creditor will always evaluate your credit report first and if there are any defaults, the creditor can reject such loan applications. If this is the case, the lender must advise you that your application has been rejected based upon your bad credit history.

As you can see, credit reports are very serious documents that can greatly impact your borrowing capacity and financial flexibility. Most of the time, credit reports are either a pass or a fail, so any default, regardless 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), 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 on time, so if you find yourself with any financial challenges and can’t pay your bills by their due date, call Bankruptcy Experts Tablelands on 1300 795 575 for support, or visit their website for more information: http://www.bankruptcyexpertstablelands.com.au