Your credit report is a record of your payment behavior. It tracks all your accounts and indicates where, over a four-year period, you missed payments or defaulted on an account. Then, after four years, this information simply disappears. Correct? Yes and no.
Your credit report contains all the positive information as well as the negative information about your payment behavior. In addition, it includes information that may or may not be considered negative by a credit provider. Some of this information may remain in your credit report, for a period longer or shorter than 4 years.
If a court issues an instruction
A court decision, for example – if a court issues an instruction to pay an outstanding amount – will remain in your credit report for five years. If you pay the entire amount due before that time, the decision will be removed from your credit report as soon as the Credit Bureau receives either proof of payment from the credit provider or a valid court decision that rewrites the decision.
Therefore, it is extremely important that the people who have decided against them and paid the outstanding judgment debt, to check with the Credit Bureau to make sure that this negative information does not remain in their credit report.
However, it is important to mention that the court debt is usually higher than the initial amount due. This is because it includes the initial debt plus any other costs that may be accrued, including interest and legal fees.
Other potentially negative information that may be contained in your credit report includes
Requests. Each time a consumer applies for credit, the creditor will conduct an inquiry into the consumer’s credit record. This information is recorded and will be reflected in the consumer credit report for 6 months. A large number of applications may indicate that you apply often for loans, which may mean you have financial difficulties.
Claims. If you file a complaint regarding your credit report and your claim is rejected, this information will be saved in your credit report for six months, after which it will be deleted.
Adverse classifications related to enforcement action by a credit provider. If you do not pay your rates and the credit provider takes action against you, such as sending a final application letter, this information will remain in your credit report for one year. If you pay the entire amount due before that time, the information will be removed from your credit report as soon as the Credit Bureau receives proof of payment from the credit provider.
Adverse classifications related to consumer behavior. These classifications are more subjective than those related to enforcement actions. For example, if you continually pay your installments late, a loan provider might have classified you as a “late” payer. This classification remains in your credit report for one year. If you pay the entire amount due before that time, the information will be removed from your credit report as soon as the Credit Bureau receives proof of payment from the credit provider.
Debt restructuring. The information regarding the debt restructuring applications remains in your credit report until the issuance of a payment certificate.
Seizure. A seizure order remains in your credit report for five years or until a rehabilitation order is granted. A rehabilitation order will continue to reflect your credit report for another five years.
Order of administration. If you asked to be placed under administration, this will remain in your credit report for five years, or until the administration order is canceled by a court.
Other information that may appear in your credit report includes:
Tracking alert. An alert is placed in your credit report. When a credit provider cannot contact you, they may request to be notified when any updated contact information is uploaded to your credit report.
Consumer observations. You can request that the Credit Bureau include an explanation of the facts or conditions affecting your credit report. For example, if your ID has been stolen, you can include this information in your report to prevent fraudulent use of your identity, and this information will be available to anyone who checks at the Credit Bureau.
If you have the impression that there is information in your credit report that should not be there or should have been removed, you should immediately file a complaint with the Credit Bureau. The bureau is obliged to investigate and answer you within 20 days.
Before applying for a loan, it is advisable to check the information from the credit bureau. Thus, find out if you are registered with outstanding invoices, and if you risk being rejected for a loan application. Please note that any rejected application will be added to your report from the Credit Bureau.
How a negative credit report affects you
There is no doubt that unpaid debts will seriously affect your credit report, and this information will be saved in the Credit Bureau. It is quite difficult to delete a negative report, but there are still solutions.
From a legal point of view, you cannot assume any new debt while you are under examination. What you can do is comply with the debt review conditions, and if and when possible, pay more than the minimum required. The first objective is obviously to repay the entire debt. The company that assists you in this process can provide you with letters to confirm that each debt is paid, known as payment certificates.
Once you have gone out of debt, you can begin the process of rebuilding your credit report and improving your score. Obviously, you must avoid as much as possible to apply for new credit immediately after payment. After about six months of good payment behavior, your ratio will improve.