Comprehensive Credit Reports

Late last year, The Government announced that it would legislate for a mandatory comprehensive credit reporting regime to come into effect by 1^st of July 2018, requiring the big four banks to participate fully in the credit reporting system.

This measure will give lenders access to a deeper, richer set of data enabling them to better assess a borrower’s true credit position and their ability to pay a loan.

Before this change was made, credit reports, which credit agencies provide to lenders when they check on applicants, only held negative information such as missed payments of more than 60 days, and bankruptcies.

There’s two sides to this – there is an opportunity to clean up your act and if you’re like most Aussies – get smarter at paying your bills on time which will positively impact your credit score. Conversely, if you have a good overall net asset position, no defaults and a good credit score now, Comprehensive credit reporting may negatively impact you.

The reason is, under the comprehensive reporting regime, there will be much more data, including monthly payment histories on loans and credit cards, where there will be red flags on any missed payments of more than 14 days. So, if you are caught being ‘busy’ and forget to pay, or even pay your bills the day they are due it can really make a difference if and when you apply for credit in the future for a home, car or business loan.

Our top tips on comprehensive credit reporting

• Know your current score and check all the details are correct – Get a copy of your credit report.
• Automate your payments – wherever possible let your direct debits pay your bill
• Budget correctly. Multiply all your bills by 12, add a little extra and divide by 52 (if you are paid weekly) or 28 (if you’re paid fortnightly) and put that into a separate account for your direct debit bills.
• Pay on time. Paying a bill the day its due is not on time as typically payments take 1-3 days to process with most institutions. The bill needs to be paid by the time that date occurs. Get a diary, put it in your phone, write it on your head. Just pay it on time.

If you want to find out your credit score – request here

OR if you want to have a chat about budgeting, hints and tips for getting a loan – contact us for a chat.