From the 12th of March 2014, the Australian laws for credit reporting is being changed.
Currently a credit report about an individual that can be shared by lenders or any other service provider is limited to credit applications and credit defaults, hence only “negative credit reporting”. Meaning the primary focus of the report was to gauge any denied credit enquiries in your history. Every time you have requested credit and denied for credit products such as a credit card or mortgage, they are recorded. The downside being multiple loan enquiries and increasingly large amounts are an easier way to rack up more crosses against your name.
Despite its importance, credit reporting is said to be poorly understood by most Australians. Veda the dominant credit reporting provider in Australia has found that up to 80% of consumers did not know such a report about them even existed.
The Australian credit reporting practices are changing in line with the rest of the OECD. Essentially now all credit reports will also display “positive reporting”. The report will also include the assessment of whether you have paid your bills on time. This can show lenders that you are a “worthy” customer however there is a flip side to the coin.
Now every time you are late in paying a bill, essentially a cross will placed against your name.
What can be done?
To minimise your risk of getting a bad credit rating would be to pay your bills on time from March. This can be done by setting your self reminders with the calendar function on your phone, setting up direct debit for bills, use mobile banking to pay on the go and try PocketBook’s app that detect bills automatically, forecasts and notifies you that a bill is due. Finally if you already have a bad credit rating, drop us a line at Balci & Associates were we can eliminate credit defaults.