Credit Reporting changes and what they mean from March 2014 on Australian credit rating reports.
What’s new in comprehensive credit reporting changes?
Previously Australia had a negative reporting system meaning consumer credit files only contained information like credit enquiries for a personal loan or credit card and defaults or serious credit infringements. Under the new comprehensive credit reporting changes positive information will now be included on credit reports. This will be more consistent and inline with other countries in the world who use and have made comprehensive credit reporting changes.
The good information which can now be included on credit reports includes account information such as the date an account was opened and closed, credit limit, type of credit account as well as 24 months repayment history. Repayment history information can only be provided by and shared with licenced credit providers, but does not include telecommunications and utility/energy companies.
The Federal Privacy Act 1988 in Australia which is the legislation governing consumer credit reporting, has been amended to include these comprehensive credit reporting changes. Comprehensive credit reporting changes the type of credit information that can be collected by credit reporting agencies (Veda, Dun & Bradstreet) and used by credit providers (Banks & lenders) when making a lending decision. These amendments came into force on 12 March 2014.
So what good has come of these credit reporting changes for consumers?
These comprehensive credit reporting changes give consumers a better ability to show lenders their credit worthiness and manage their finances in a positive manner.
Better rates with Lenders. With a more detailed credit rating and regular updates, having a credit history showing good credit behaviour will become important in being approved for finance at the best price and best rates.
Good credit activity. You will be able to show good credit behaviour because the new system records if you have made your credit payments on time.
Faster Credit rating establishment times for new borrowers. For individuals new to borrowing the use of comprehensive credit reporting changes means that you can build a credit rating quicker. Such as if you are young or a new Australian.
Better balanced system. A better balanced system for borrowers who already have a good credit history in addition to borrowers who previously had difficulty making payments, all because you may be able to access quality credit where previously not possible.
Better financial healing times. Improve your credit report quicker after an adverse financial event by showing good credit behaviour which may offset the impact of defaults.
What impact will these credit reporting changes have on me?
From 12 March this new information is permitted to be collected, held and disclosed by credit reporting agencies such as Veda or Dun & Bradstreet. Once this data is supplied to them by by credit providers (lenders), your credit history will include information such as but not limited to account open date and close dates, the type of credit account such as a credit card or personal loan and the associated credit limit. Credit limit increase can be included on your credit history under new credit reporting changes.
Also showing may be monthly payment history on finance such as mortgages or credit cards. This will show if you paid the minimum amount required by the due dates but only relates to credit supplied by licensed credit providers.
Information which already appears on your credit history includes but is not limited to personal details such as name, address and date of birth, consumer credit information such as credit or loan applications known as enquiries, overdue payments known as defaults, serious credit infringements known as “clearouts” , publicly available information such as bankruptcy information, court actions and directorship information.
What happens from now on if I am just a couple of days late with a repayment?
If you make a late payment and it is more than around 10 days past the due payment date ( still being amended ) this can be recorded on your credit rating which will be part of your repayment history information (CCRI) as a late payment. This repayment history information is recorded on your credit report for a period of 2 years and is part of the new Comprehensive Credit Reporting changes.
Defaults can only be recorded on your credit history if you miss a payment which is more than $150 and is more than 60 days overdue. Before listing a default the credit provider must have taken steps to collect the whole or part of the outstanding debt and acted under the correct procedures with issuing of notices and attempted contact methods. Defaults are a five year listing which is very adverse on your credit file!
So, under new Comprehensive Credit Reporting changes make sure you do,
1) Make all loan and credit payments on time. Be more diligent about diarising payment dates if you have difficulty remembering or scheduling these bill payment times.
2) Do not wait for a lender to contact you if you are having troubles. Do not think just one missed payment will be overlooked. Be pro active and contact your lender to discuss any potential difficulties. They are obliged to help you manage your payments in times of hardship and it will look good on record that you have contacted them first.
3) Keep applications to a minimum. Don’t think an online application will not be included on your credit history just because you did not get the finance. Lenders do not like to see an “excessive shopping history” when it comes to applications on your credit history and this also lowers your credit score.
How can I see my current credit history report and any changes?
We can assess your Veda report immediately for a fee of $35 on our site application by clicking here Click Here
Our assessment service charge is for compilation of our findings but we do not charge for accessing your Veda credit file. Your credit file is passed onto you free of charge after we have finished our assessment service
Alternatively you can get a copy of your credit history from a credit bureau but you will have to wait and then assess yourself. You must apply through a credit reporting bureau.