Another reason to pay your bills on time!

Written and accurate as at: 14 April 2014

Since 1991 under the Privacy Act, Australia implemented a ‘negative credit reporting’ system meaning it listed each time you made an application for credit including loans, credit cards, personal finance, hire purchase and business funding. It also recorded negative information about your credit history such as default payments and bills outstanding for more than 60 days.

In March 2014, Australia introduced a ‘comprehensive credit reporting’ system. This system, like the systems of the United States and United Kingdom, will allow licensed credit providers to access more detailed information to assist them to make better lending decisions. Along with any negative information, your credit report will now show if you manage your credit well, whether you keep up to date with your repayments.

If you had trouble making loan or credit repayments in the past then these changes may be positive for you as a negative credit history may become balanced with information that shows recent improvement in the way you manage debts and repayments. It can also assist those who have recently turned 18, or who haven’t applied for credit in the past, as the new system will show positive information about repayment habits and a clearer picture of your current financial position.

An example of some of the information that will be included on your credit report now includes:

  • Personal information including your name, previous names, date of birth, gender, current and two previous addresses, drivers licence number and current and last known employer.
  • The number of times you’ve applied for credit and the amount you applied for.
  • The date you opened and closed your credit accounts.
  • Commercial credit (if you have applied for credit as a business owner).
  • The maximum amount of credit available to you under your existing credit arrangements.
  • Terms and conditions of your current credit including terms and repayment types (i.e. interest only or principle and interest)
  • Current default information including amounts paid, the date paid, to whom and how much.
  • Court judgements about credit applied for or provided to you and information about a bankruptcy or debt agreement.

Due to the inclusion of more personal information in your credit report, the Australian Government has put in place stronger measures to protect the privacy of your personal information and to control and restrict who can access this information on your behalf.

Under the Privacy Act you have the right to find out what is in your credit report and to correct any incorrect information or listings. You can request a copy of your credit report each year or if you have been denied credit in the last 3 months. If you are willing to wait 10 days to receive the report, then it is free, but you may need to pay for it if you need the report sooner than that.

To access your credit report, you’ll need to provide the credit reporting agency with information to prove your identity. This may include personal identification such as your drivers licence or passport, your address and contact details, details of your current or previous employers and your signature. It’s also important to note that you could have a report with more than one credit reporting agency so you may need to request multiple copies of your credit file.

Although these changes may not seem overly significant there is one change that requires everyone’s attention and that is the potential impact on your credit report if you miss a payment on a credit card, mortgage or other bills. Previously only bills 60 + days overdue could be recorded as a default on your credit report but this has changed to just 5 days after the due date. Any amount remaining unpaid by 5 or more days may be recorded in your credit report and could potentially impair your credit rating and impact on your ability to borrow money in the future.

Check out our Credit Report Checklist and Debt Management Basics article for more information on this and other tips on how to manage your credit effectively.