Australia's credit history reporting system has been reviewed by the Australian government and will change in March 2014
Important information about credit reporting changes
Merrilyn Mansfield: Financial Advocate, PRINCEVILLE Credit Advocates
Positive credit reporting
Australians will finally have a credit report which reports not only the negative but now also the positive, and the new data will start to be shared from March 2014.
There are now five new data fields which are included in your credit file. These are:
- Date your account was opened
- The current limit of this account
- The nature of the credit account
- The date the account was closed if applicable
- Your account payment history for licensed credit providers
Currently only information regarding if you’ve failed to pay a bill, defaulted on a loan, or even made late payments is included on your credit report. Other items on your report show when a lender has accessed your report (for example, if you’re applying for a credit card or a mortgage, the lender will often run a check on your report). Basically, this means that for most people credit reports are fairly bland and boring documents – which, of course, is exactly what you want them to be if they only have negative information on them.
But this system means lenders have much less information to go by when they’re assessing whether or not you are a good risk or a bad risk for a loan, and they might hold it against you if you’ve had a number of ‘credit report access’ lines listed on your report. For example, if you’ve applied for a few different credit cards, they might all show up on your report, and then start to make you look bad if you’re later applying for a mortgage.
This contrasts to the system in the US and UK where they have a positive reporting environment and individuals can build up collateral if they pay their credit cards or rent on time, or if they promptly pay off a car loan or make regular payments on their mortgage. These types of positive events are added to people’s files, so when it comes time for them to get a loan, the new lenders can see how reliable they are. This not only can improve your chances of securing a loan, it has been known to help people negotiate more favourable interest rates because they can demonstrate to their new lender that they are a low-default risk.
A win-win situation
In 2011, Credit reporting bureau Equifax carried out a pilot study with ten of Australia's major lenders which lasted for two years. The findings supported the view that the Comprehensive Credit Reporting (CCR) program will increase the information lenders can access and help provide a fairer system for consumers.
Order a copy of your credit file
Receive email alerts whenever specific changes occur on your credit file for 12 months. You also receive a copy of your credit file despatched within one working day..
Receive your credit file with information on:
- Details of consumer credit enquiries
- Details of overdue consumer credit accounts
- Commercial credit enquiries
- Details of overdue commercial credit accounts
- Bankruptcy & Court Judgements
- Writs & Summons
- Information on your current relationship with a credit provider
- $79.95 p.a. annual fee
Steps for checking your credit report
- Follow this link
- Choose the free option if you’re happy to wait ten days for your report or pay $30 if you want the information immediately;
- Enter your basic personal details, such as your contact information, employer and drivers’ license; and
- Once your report is emailed to you a few days later, run your eyes over the PDF file to you to see what lenders can find out about you.
- If there are any negative incidents recorded against your name, they will expire within five years of the event occurring (or seven years for the big ones such as bankruptcy).
- If there is something on your report you don’t think is correct, you should first contact the lender who made the listing (for example, the bank’s name might be there so get in touch with them directly). Maybe there is a payment you overlooked and changed address and didn’t realise you hadn’t paid it. If you are sure it is incorrect, you can contact the credit reporter and ask about the process of having the item removed. Sometimes unexpected black marks on your credit report can reveal identity theft or other fraudulent activity so it’s important to get straight onto it.
Here’s to wishing you a bland and boring credit report. That is, until the days we can celebrate a positive report and start building up brownie points to show lenders just how reliable we can be - which is coming soon!