A credit report is an in-depth document that shows your history with creditors and has a notable effect on your future financial capabilities. Possessing a ‘good’ credit report is typical so long as you pay your bills and debt repayments on time. However, missing a repayment on a bill or debt repayment can cause substantial problems if you need to gain credit again in the future. A while ago, the rules have been modified to place a greater importance on affirmative history such as paying your bills on schedule, but overwhelmingly, credit reports are used as a means for lenders to examine your capabilities to repay a loan by looking for any financial mistakes you’ve made previously. If you have made some financial oversights, how long does this information remain on your credit report? What types of financial errors are more severe than others? This post will investigate these questions to give you a better understanding of how these documents work.
What Do Credit Reports Entail
The following will specify the type of information that is commonly found on your credit report:
Personal Information for instance your name, DOB, address and driver’s licence details
Joint applicant details if you’ve obtained credit jointly with another individual
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 more than 60 days overdue
All credit applications
Debt agreements such as bankruptcy, personal insolvency, and court judgements
Repayment history which is probably the most critical 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 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 lenders who have previously requested a copy of your credit report1
Credit Report Defaults
Defaults with lenders will be specified on your credit report and will affect your capability to attain credit down the road, so it’s critical 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 note this information on your credit report. With that being said, lending institutions can only do this if the following rules 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 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. 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 5 years, although if a financial institution cannot contact you because you’ve changed your phone number and address (known as ‘clearout’), the consequences are more harsh and the default will continue to be on your credit report for 7 years. It’s important to note that even when you do repay 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 settled. Whenever you make an application for a loan, the financial institution will always review your credit report first and if there are any defaults, the lender can reject such loan applications. If this is the case, the lender must notify you that your application has been rejected founded on your poor credit history.
As you can see, credit reports are serious documents that can notably impact your borrowing capability and financial flexibility. Most of the time, credit reports are either a pass or a fail, so any default, irrespective of how big or small, will be specified on your credit report for five years. While there are measures to improve your credit rating (such as paying your bills on schedule), loan providers 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, talk to Bankruptcy Experts Brisbane on 1300 795 575 for support, or visit their website for more details: http://www.bankruptcyexpertsbrisbane.com.au