Credit reporting, is it really such a big deal? In short, yes is. There is a whole industry dedicated to credit repair, and trying to fix your credit rating.
We won’t speculate on the ethics of business that claim to repair your credit rating, no questions asked, but it is clear there is a lot of confusion around what credit reporting, and credit repair, really is. So we thought we would dedicate a blog post to the topic.
What is credit reporting?
In the most simple terms credit reporting is the act of your creditor reporting to a credit agency what debts your currently hold, and whether you pay your payments on time, and if you overall a good or bad risk financially.
Often when people find themselves in financial difficulty they end up taking out a number of loans, or using credit cards to get through a tough time. All of this is recorded against your credit file, and affects your overall credit rating.
What’s in my credit report?
Information included in your credit report include:
- Personal details, eg. DOB, driver licence numbers etc.
- Joint applications, if you have a joint debt with another person their name will appear on your report
- Credit cards
- Credit application
- Debt Agreements
- Repayment history
- Commercial credit applications, this means business or commercial loans
- Who has requested your report, a list of any creditors who have requested a copy of your report
Will my missed payment be listed on my report?
If you fail to make a payment, your creditor may refer your debt to a debt collector and/or report your debt to a credit reporting agency and ask them to record the default on your credit report.
A credit provider may report your debt if:
- The default amount is a minimum of $150
- You’re a ‘confirmed missing debtor’ or ‘clearout’ which means that your creditor can’t get in contact with you
- 60 days or more have passed since the due date for payment
- The creditor has asked you to pay the debt
How long is a default listed on my file?
A missed payment, default, or any negative credit history is recorded on your credit report for a term of 5 years, unless you are in any legislated agreement which last longer, in which case it will remain on your file for the life of the agreement.
Can I access my credit report?
Yes. You are entitled to a free copy of your credit report once a year. You can request your report here.
It is possible to repair your credit once you have been hit with a missed payment, or any other mark on your credit report. If it is simply due to a mistake or misreporting Veda lays out a simple 5 step plan for anyone who needs to make a correction. More work may be required if it is more than a simple correction. Be very careful, however, of any company that claims it can rid of any negative reporting on your file for you. It is unlikely any creditor would remove a negative rating on your profile without just reason. A number of these credit repair company’s are able to assist you if you have complex issues that need to be sorted on your file but they can be expensive with no guarantee of results. It is important if you are to actively pursue credit repair, it is done organically.
Brand & Communications Manager
Elise is passionate about finance, and is on a mission to explore and share different tactics for tackling the everyday financial challenges in realistic and achievable ways. With a background in communications, digital marketing, and public relations, Elise uses her skills to generate new ideas and content to help make finance fun.