Credit Reporting In Australia
Maintaining a good line of credit is essential to modern day life. Potential lenders will assess your credit history in determining your capacity to repay a credit card, loan or other forms of borrowing. This means that every time you apply for an increase in your credit card limit, a loan, overdraft facility, when hiring furniture or even applying for a new mobile phone contract, your credit history will be scrutinised. A poor credit rating means that you may be liable to pay a higher than average interest rate when taking out your next loan. Worse still, a history of poor credit could see you labelled as a high credit risk meaning that you are unable to borrow money or gain finance.
Checking And Assessing Your Credit Report
Checking your credit rating is an important measure to ensure your credit standing is complete and accurate. It is advisable to do this at least once every year. Your credit report will list all of the information that is contained in your personal credit file.
This may include everything from current credit cards or home loans that you may hold, applications to increase your line of credit (whether successful or not), bankruptcies, overdue credit amounts (such as personal loans, credit cards or business-related loans), directorships, court orders, writs and summons.
Recent statistics released by the Australian Retail Credit Association revealed that 59% of Australians do not understand how the country’s credit reporting system operates and fewer still were aware of recent changes made to the credit reporting regime in 2014. Australia’s new Comprehensive Credit Reporting system is one of the most stringent in operation anywhere in the world. The new provisions allow for your credit history to be shared between credit providers to provide a broader history of the type of loans you hold and the amount of credit you have.
These changes dictate what repayments will be included on your credit report. Credit reports now detail your repayment history for a range of credit based activities including credit cards, car loans, in-store finance offers (such as interest free repayment terms), personal loans and home loans. This information will specifically list when payments were due and whether or not they were paid on time in addition to missed payments. Interestingly however, the amendments mean that a credit report does not provide information regarding utility payments such as gas, phone bills or electricity.
Accessing Your Credit Report
A number of providers offer credit reporting services in Australia. You will require the following information in order to receive a credit report.
• Full name
• Date of birth
• Current address
• Previous address
• Day time telephone number
• Current employer
• Drivers licence, passport, birth certificate
• A document that contains your full name and address such as a utility bill, bank statement or rates notice.
Protecting Your Credit Rating
As with anything in life, mistakes are often made with regards to compiling your credit history. That’s why it is important to regularly check your credit report and fix any errors as they arise. The Australian Information Commissioner discovered that 30% of people who checked their credit report in 2013 identified errors.
Fixing these mistakes is a relatively straightforward process that can potentially save you thousands of dollars and remove impediments to your future borrowing capacity. Any problems identified with your credit history should be directed immediately to the credit provider. If they are unwilling or unable to fix the problem then contact the relevant ombudsman or dispute resolution provider applicable to the state or industry in which the credit was issued (e.g. telecommunications providers, banks or non-bank lenders).
How To Maintain A Clean Credit History
Ensuring that you maintain a clean credit history under the new reporting regime requires that all bills and loans are paid in full and on time. To achieve this you can establish direct debits that automatically cover recurring payments such as home loans or credit card interest at monthly or quarterly interval.
Limit new credit applications
Another strategy to improve your credit standing is to limit the amount of credit applications that you make. Although 0% balance transfers on your credit card repayments may seem attractive, if you are unsuccessful in gaining the patronage of a new banking institution this blemish will show up on your credit report. For this reason, it pays to seek professional financial advice before seeking credit increases.
If you get into trouble, speak with your credit institution
In spite of what many people think, financial institutions do offer some leeway with regards to extenuating financial circumstances. If for whatever reason you are unable to meet your repayments, then pick up the phone and talk with them. There may be avenues to negotiate new terms, an extension or lesser repayments as you attempt to work your way out of the financial woods.
Apply for electronic billing
Believe it or not, many people miss out on making repayments in time due to the fact they’ve lost the bill. To overcome this, request electronic billing from all of your major credit facilities. Home loans and personal loans such as car finance can easily be tracked online via electronic banking platforms but make sure you are signed up via your institution. When receiving bills via email, it is a good idea to flag them as important and set a reminder in your online calendar in the lead up to their due date.
Remember that your credit report is now available to a wide range of financial institutions that you may wish to seek credit from. Recent changes to the credit reporting standard enacted in 2014 mean that your previous financial indiscretions are now available for the world to see. This means that it is more important than ever to keep track of bills and make repayments on time. Should you identify any mistakes in your credit history then do everything in your power to fix them: either with the credit institution itself or relevant appeal body. If nothing else, then source your credit report yearly to make sure that it is accurate and a complete representation of your credit history.
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Our Bundall (Gold Coast) office offers the following services;
Level 10 Corporate Centre One,
2 Corporate Court, Bundall QLD 4217 Australia
PO Box 8966, GCMC Bundall QLD 9726
Phone: 1300 440 281
Fax: 07 5574 0762