The New Credit Habit Every Australian Should Adopt in 2014.

15 January 2014, 11:54AM
Femme

New credit history data about Australians is set to be shared with credit providers in March this year, after a 16-month collection period that many consumers have been unaware of - and a consumer credit advocate is warning Australians about the importance of routinely checking their credit rating to make sure their information is accurate.

Graham Doessel, Non-Legal Director of MyCRA Lawyers - a firm focusing on credit disputes, says come March, Australia's credit reporting laws are set for a major overhaul as part of widespread changes to the Privacy Act 1988 (Cth) and a move to more "comprehensive" credit reporting will see much more information available to lenders, including repayment history.

"Since December 2012 if you have been late making repayments to finance providers on accounts such as credit cards and loans, this information has been collected. From March 2014 this information will be included as part of your credit history and available to potential lenders who perform a credit check," Mr Doessel explains.

The other new data sets available to lenders include - the date on which a credit account was opened; the date on which a credit account was closed; the type of credit account opened; and the current limit of each open credit account.

"It is up to every individual to ensure the information recorded about them is accurate, but unfortunately, the majority of Australians are just not checking their credit rating - I think this is a big worry going forward under these new laws."

In September last year, credit reporting agency Veda Advantage published results of a survey showing that a whopping 80 per cent of Australians have never checked their credit history and 53 per cent were not aware that they could ask for a copy of their credit file.(1)

Mr Doessel says these numbers reflect a nation which is largely unaware of just how important their credit file can be for lenders making financial decisions.

"There are no class lines, whether rich or poor if your credit file is ‘impaired' by negative notations, your ability to obtain credit will be affected or the interest rate you are offered will be higher," he says.

Up till now, only accounts more than 60 days in arrears were recorded on Australian credit files and listed as ‘defaults'. The new laws add to this, and allow for the 2-year recording of late payments on licenced credit made even one day late, although Mr Doessel says a grace period of 5 days has been proposed to be implemented with a new Credit Reporting Code of Conduct.

"Five days is still an extremely small window in which to ensure that mistakes or simple oversights on both sides haven't occurred. It is really essential that Australians keep good paperwork on all credit accounts, and routinely check their credit history," he says.

Mr Doessel says it is unknown just what weight lenders will give to this new information they have available to them.
"It's up to each lender and their own calculations as to how they treat this new information as well as whether a potential borrower is refused credit or bumped up to a higher interest rate. But I believe late payment notations will impact the individual's credit score," he says.

 

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