Are you tired of being held back by a bad credit rating? If you’ve received your free credit report only to find that you have a poor rating, it’s easy to feel overwhelmed. The financial landscape can be tough, but we promise there’s good news – with an experienced credit repair service, you can take control of your credit score and pave the way to a brighter financial future. In this blog, we’ll explore how long a bad credit rating lasts in Australia. Plus, more importantly, we’ll highlight how Credit Repair Solicitors can be your key to unlocking financial freedom.
Understanding the Impact of Bad Credit
A bad credit rating can cast a shadow over your financial life, limiting your ability to secure loans, obtain favourable interest rates, and even hinder your chances of renting. A positive credit rating is particularly important if you’re currently looking to buy a new car or home.
Australia has introduced Comprehensive Credit Reporting, meaning your credit report contains detailed information about your history, including late payments, defaults, and bankruptcies, along with positive behaviours, such as paying your bills on time.
Essentially, a bad credit score implies to lenders that you may have had difficulties paying back what you owe on time in the past, and they may decide not to lend to you — or they may charge you a higher interest rate than someone with a better credit score. Negative information can stay on your credit report for varying periods, each impacting your creditworthiness.
What Counts as a Bad Credit Score?
How your credit score is calculated will depend on where you have accessed your free credit report. Most credit bureaus will use the following scale:
- Excellent: 853-1200
- Very Good: 735-852
- Good: 661-734
- Average: 460-660
- Below average: 0-459
To most lenders, an Average and Below Average score will be considered bad credit. The Below Average category identifies you as being a high risk borrower, in the bottom 20% of the population with a high likelihood of an adverse event within the next 12 months. The Average category means an adverse event is likely in the next 12 months, when compared to the wider population.
The Duration of Bad Credit
The duration of a bad credit rating in Australia depends on the nature of the negative information. Here’s a breakdown:
Late Payments
Generally, late payments remain on your credit report for up to two years. The late payment stays on the report even after it is paid. Considered ‘Repayment History,’ a late (but eventually paid) repayment is one of the shorter-lived pieces of negative information. However, if the repayment is never made, this becomes a default.
Defaults
A default – a failure to repay a loan or meet financial obligations – can stay on your credit report for five years from the date it was listed. The lender can list your overdue account as a default after 60 days of non-payment.
Clearouts
Like a default, a clearout is where you have failed to repay a loan or meet a financial obligation, but the lender is unable to contact you about it. If they cannot reach you, the lender can immediately list the debt as a clearout without waiting 60 days. Clearouts are considered especially concerning to lenders, so you should always update your details when you move or change phone numbers.
Collection or Charged-Off Accounts
If your default isn’t paid, eventually the lender may ‘charge off’ your account. This means that they have assigned your debt to a collection agency, who will pursue you for payment. A collection is highly negative information, and will live on your credit report for seven years from the date of your first missed payment that led to the collection.
A good credit repair service will work with the collection agency on your behalf to resolve the collection account before the seven-year period is up. The collection may remain on your credit report even after payment, but the account may impact your credit score less.
Bankruptcies
The most serious of all negative information, bankruptcies are a severe blemish on your credit history and can linger for up to seven years (according to Equifax). They also have the most significant impact on your credit. If you file for bankruptcy, you can expect to have this listed on your credit report for at least five years.
Other
The examples of negative information named above are relatively common and often at the centre of bad credit. However, there are other forms of negative information you should be aware of:
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- Court judgment: five years
- Credit enquiry: five years
- Current consumer credit obligations: two years (from the end of the consumer credit)
- Debt agreement: The latter of:
- five years from the day the agreement was made
- two years from the day the agreement was:
- terminated
- ends when the agreement ends under s 185N of the Bankruptcy Act 1966
- an order was made declaring the agreement void
- Financial hardship information: one year
- Serious credit infringement: seven years
In Summary you should not wait for the bad credit to drop off as it can have ongoing affects on your credit report for years to come. However, getting the adverse entry removed will mean in instantaneous improvement to your credit score and creditworthiness.
Credit Repair Services – Your Path to Financial Redemption
Now that you understand the timeline of bad credit, it’s time to explore the solution – Credit Repair Solicitors. Our professional team specialises in navigating the complex world of credit reporting and works diligently to improve your credit score.
Here’s how credit repair services can benefit you:
Expertise in Credit Law
Credit Repair Solicitors are well-versed in Australian credit laws and regulations. We understand the intricacies of credit reporting and can identify inaccuracies or unfair listings on your credit report.
Dispute Resolution
Our credit repair services can dispute negative items on your credit report, challenge inaccuracies, and negotiate with creditors to remove or amend damaging information.
Personalised Strategies
At Credit Repair Solicitors, we tailor our approach to your unique situation, developing personalised strategies to address specific issues and boost your credit score effectively.
Financial Guidance
Beyond repairing your credit, we can provide valuable financial guidance, empowering you to make informed decisions and avoid pitfalls that may impact your credit in the future.
Take the First Step in Improving Your Credit Score
With the help of Credit Repair Solicitors, you can expedite your credit recovery and take significant steps towards financial redemption. Remember, the duration of bad credit is not set in stone – take control of your credit score today and let Credit Repair Solicitors guide you on this journey.