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A credit report is a comprehensive document that contains your history with creditors and has a notable effect on your future financial opportunities. Possessing a ‘good’ credit report is standard as long as you pay your bills and debt repayments on time. However, overlooking a repayment on a bill or debt repayment can cause substantial complications if you plan to acquire credit again in the future. In recent times, the rules have been changed to place a greater emphasis on constructive history such as paying your bills in a timely manner, but overwhelmingly, credit reports are used as a way for creditors to evaluate your abilities to repay a loan by looking for any financial mistakes you’ve made before. If you have made some financial oversights, how long does this information stay on your credit report? What kinds of financial errors are more serious than others? This blog will investigate these questions so as to give you a better understanding of how these documents work.

What Do Credit Reports Entail

The following will detail the kind of information that is typically found on your credit report:

Personal Information including your name, address, DOB 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, such as any overdue or unpaid debts that have since been repaid

Defaults and other infringements for example 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 probably the most meaningful 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 contain 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 shown on your credit report and will have an effect on your capacity to receive credit in the future, so it’s crucial to recognise what constitutes a default on your credit report. If you cannot make a payment on a debt, your creditor has the ability 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 conditions 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 inform you of any intents in lodging a report before doing this. Traditionally, your contract or service agreement will describe when a default can be made and reported to a credit reporting agency.

How Long Does A Default Remain On My Credit Report

The majority of the time, a credit default will remain on your credit report for five years, but if a creditor cannot contact you because you’ve changed your contact number and address (known as ‘clearout’), the consequences are more severe and the default will continue to be on your credit report for seven years. It is necessary to keep in mind that even when you do pay an overdue debt, the default will nonetheless remain on your credit report, but the status will be updated to show that the debt has been settled. Every time you apply for a loan, the lender will always look at 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 inform you that your application has been rejected based on your bad credit history.

As you can see, credit reports are serious documents that can greatly impact your borrowing capacity and financial flexibility. The majority of the time, credit reports are either a pass or a fail, so any default, irrespective of how big or small, will be detailed on your credit report for five years. Although there are measures to improve your credit rating (for instance paying your bills on time), 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, talk to Bankruptcy Experts Gladstone on 1300 795 575 for support, or visit their website for more information: