Credit report changes: don’t be caught out
On 1 July 2018, Australia moved to a positive credit reporting system. This means credit providers are obliged to provide credit-reporting agencies with more information on what accounts you hold and how you’re managing them.
Previously, your credit file would only capture negative credit events: overdue debts, defaults, bankruptcies and court judgments. But the new system – also known as ‘comprehensive credit reporting’ – records your entire repayment history for each line of credit you have. This could include your:
- Mortgage
- Car/personal loan
- Credit/store cards
- Utility and telecommunications services.
The system details when you make payments on time or late, and when accounts are opened and closed. This means potential lenders have a much fuller picture of exactly what debt you hold and just how effectively you’re servicing it.
What does it all mean?
While this level of scrutiny may feel uncomfortable, it could enable you to obtain a loan for which you’d previously have been rejected. Demonstrating sustained good financial management prior to applying for credit will show up on your file and could offset a default notice from a few years ago. Also, if you’re a newer borrower or have little credit history, you should be able to establish a credit score more quickly.