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How will a debt agreement affect my credit record and for how long?

A debt agreement will have a negative effect on an individual's credit score. In Australia, the credit reporting system only records negative credit events, such as late payments or disputed payments. While a debt agreement can be seen as a positive action to restoring one's credit, it will be recorded as a negative event and will keep some creditors from granting new or further credit to an individual who has entered into a debt agreement.


The details of the debt agreement are recorded by credit reporting agency, and credit companies will know that individuals have entered into the agreement and the details thereof. Creditors will then use this information in order to make a decision on whether to extend credit to an individual's, entering into a debt agreement will have a negative effect on the decision a majority of the time.

The debt agreement will remain on an individual's credit report for seven years. That means that for seven years the debt agreement is likely to have a negative effect on one's credit score and make it difficult to obtain credit. It is important to remember that one should also ensure that they stick to the agreements made in their credit proposals and debt agreement because being delinquent in these areas can be negatively reflected in one's credit score.


While the debt agreement will have a negative effect on your credit score for a period of seven years, it is important to remember that doing nothing or filing bankruptcy can have even more of a negative effect. A debt agreement is offered to allow for individuals to work on repairing their credit. While it is important to realize the consequences of such agreement, realizing that it may be an important step into the right direction in repairing your credit is important as well.


Any debt not covered under the debt agreement can still be effectively worked on. This means paying payments early and paying as much as possible to reduce balances as much as possible. This is so everything will be in great shape when it is time for the debt agreement to be removed from the credit file.

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1. Your Credit Rating and Dealing with Bad Credit -> View All Questions

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