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).
• Whether monthly repayments have been paid on time over the past two years (this information can only be supplied and accessed by credit providers that hold an Australian Credit Licence or by an organisation that is considering providing mortgage insurance for a home loan you have applied for).
• Publicly available information about your history and activities in relation to consumer credit.
• A credit provider’s opinion that you have fraudulently attempted to secure credit or fraudulently evaded your repayment obligations, or that you do not intend to comply with your repayment obligations (after taking steps to contact you over a period of at least six months and failing to do so).
• Court judgements about credit provided to you (or that you applied for).
• Information about bankruptcy, a debt agreement or personal insolvency.
• Payments made later than five days past their due date (they may appear but will not be marked as a default).

• Get a copy of your credit report so you know where you stand.
• Set up direct debits from your bank account to ensure bills are paid on time.
• Consider chunking bills into small, regular amounts to avoid struggling with any big payments at one time.
• Keep track of all credit commitments and only apply for credit when you really need it – close accounts you don’t need.
• If you’re having trouble meeting payments, ask for an extension or negotiate new terms.