Positive Spin on Credit Reports
Up until a year ago credit reports for individuals in Australia worked on the basis that good news was no news. In other words, credit reporting only looked at the negatives, highlighting financial failings – such as defaults on loans and bankruptcies – without any acknowledgment of fiscal achievements.
Since March 12 last year, amendments to the Privacy Act changed all of that and paved the way for positive credit reporting. The new-look credit reports contain a wider range of information, giving lenders the opportunity to make better-informed assessments about your ability to repay debt.
So what does this mean for you and how can you ensure your report shapes up?
The aim of the new system is to provide a more accurate picture of your credit history, including the good, the bad and the ugly. The good news is that consumers with some black marks against their name now have the opportunity to redeem themselves, providing they can demonstrate a positive track record through regular, on-time payments. The bad news is that now even smallish unpaid bills can show on your report.
The message is clear: the more your payments are up to date, the better your credit standing.
Under the new comprehensive reporting system, your credit report may contain:
- Your current and any previous names, date of birth, gender, current or last known address and two previous addresses, current or last known employer and driver's licence number.
- Whether you have applied for credit and the amount you applied for, the dates you opened and closed any credit accounts, plus the maximum amount of credit available to you under each account.
- Any increases in credit limits, such as an increase on a credit card.
- Payments on which you have defaulted, which means any payment of more than $150 that is at least 60 days overdue and for which you have been served at least two notices.
- Whether you have paid the full amount of a default and the date paid.
- Whether, because of a default, you have entered into a new or amended arrangement with that credit provider (or another credit provider).