A credit report is a specific document that lists your history with creditors and has a significant effect on your future financial capabilities. Having a ‘good’ credit report is typical as long as you pay your bills and debt repayments on time. Having said that, overlooking a repayment on a bill or debt repayment can cause substantial problems if you plan to obtain credit again down the road. A while ago, the rules have been adjusted to place a greater importance on positive history such as paying your bills in a timely manner, but overwhelmingly, credit reports are utilised as a means for lenders to examine your abilities to repay a loan by checking for any financial mistakes you’ve made before. If you have made some financial errors, how long does this information stay on your credit report? What kinds of financial errors are more drastic than others? This article will take a look at these questions so as 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 normally found on your credit report:
Personal Information for example your name, address, DOB and driver’s licence details
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 in excess of 60 days overdue
All credit applications
Debt agreements for instance bankruptcy, personal insolvency, and court judgements
Repayment history which is likely the most critical element of your credit report. It covers all credit accounts like 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 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 affect your capacity 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 loan provider has the capability to report your debt to a credit reporting agency who will then document this information on your credit report. But, lending institutions can only do this if the following prerequisites apply:
The default amount is equal to or more than $150;
You’re a ‘confirmed missing debtor’ or ‘clearout’ which suggests 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 financial institution must notify you of any intentions in lodging a report before doing this. Traditionally, 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 Stay On My Credit Report
In the majority of cases, a credit default will stay on your credit report for five years, but if a creditor cannot contact you because you’ve changed your phone number and address (known as ‘clearout’), the penalties are more harsh and the default will continue to be on your credit report for 7 years. It is necessary to note that even when you do settle an overdue debt, the default will nevertheless stay on your credit report, but the status will be updated to reflect that the debt has been settled. Any time you apply for a loan, the lender will always assess 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 founded on your bad credit report.
As you can see, credit reports are very serious documents that can drastically impact your borrowing capability and financial flexibility. In the majority of cases, 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. Although 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 find yourself with any financial challenges and can’t pay your bills by their due date, call Bankruptcy Experts Townsville on 1300 795 575 for support, or visit their website for more information: http://www.bankruptcyexpertstownsville.com.au