Major Changes to Credit Reporting

[Andrew from Vista Financial]

Australian credit reporting practices are changing to be inline with the rest of the OECD.

 

Traditionally, Australia have used “negative” reporting.

 

From March 12, this will change to “positive reporting” – meaning the assessment will be made with the focus on whether or not you’ve serviced your credit on time.

 

In its totality, this is a fairer system because more data is considered so it’ll be a truer representation of how “good” you are.

 

However, there is a downside. The implication of the new laws is that every time you’re late paying a bill, a black mark will essentially be registered against your name.

 

Whilst the new reporting comes into effect from March 12 2014 companies can backdate data to Dec 2012: http://www.oaic.gov.au/privacy/privacy-resources/privacy-fact-sheets/credit-and-finance/privacy-fact-sheet-16-credit-reporting-repayment-history-information

 

For more info read the following links:

 

https://getpocketbook.com/blog/shouldnt-pay-bills-late-march-2014/

 

http://www.smh.com.au/comment/big-black-mark-for-new-credit-reporting-rules-20140210-32d1i.html

 

 

Regards

 

Andy

[Smithers]

Would this apply to your credit history in the uk as well?

[Andrew from Vista Financial]

Hi Stephen

 

Actually at this stage there seems to be some uncertainty about how this will impact things certainly initially anyway.

 

Credit scroing is already used by a number of Banks/Lenders for mortgages, not all and so the data collected regarding late payments will most certainly form part of the algorithm.

 

We had a a Global Bank present yesterday and they suggested that there were a number of lenders that showed resitance with taking part in this due to the time involved in reporting and certainly there is suggestion that a number will only report data as of March this year and not backdate to December 2012 (as they are able to).

 

Personally I do not think it will impact on new migrants in terms of having to build a credit rating before being able to secure a mortgage, I think it is more to do with lenders being able to fully understand the potential clients payment habits in making there lending decisions.

 

I also think that from this we might start to see more lenders rate for risk in other words if they do have a habit of paying late but do pay for example, a loan may be offered but with a higher than normal interest rate.

 

Regards

 

Andy