What Aussies can expect from the latest credit shakeup
New changes to credit reporting mean banks and companies can access new info on your credit history.
Paying off your credit card on time and ensuring that you don’t get behind on bills and mortgage payments are all good ways to ensure your credit rating remains good.
And with comprehensive credit reporting (CCR) hitting Australia, it could be more important than ever. While CCR can be a positive measure rewarding consumers for good behaviour, it may also come with some hidden stings if you’re not careful.
The additional information that banks and companies will have access to gives them an idea of exactly how good the consumer is with their money, including if you pay your bills on time and make any additional repayments.
TODAY chatted to money guru Patrick Canion about these changes and what consumers need to know when the new reporting rolls out.
TODAY: Patrick – tell us about these changes, and when do they come into place?
CANION: Comprehensive Credit Reporting comes into effect from July 1 2018. The government is forcing the banks to share your repayment information with credit agencies, to bring in more competition for your business. It means bank, credit cards companies and others like phone companies will share a lot more info on how good — or otherwise — you are at paying on time.
TODAY: How will this affect consumers in a positive way?
CANION: Previously, they only shared negative information (i.e. defaults, bankruptcy, late payments) whereas in future a lot more ‘positive’ information (in-depth payment records showing on-time repayments, credit limits, and repaid loans) will be shared.
TODAY: What are the negatives?
CANION: If you don’t have a great track record, it could mean that it become even tougher to get credit in the future, or interest rates may be higher. Credit is an essential part of our economy so it could mean a part of our society are denied a chance to get ahead or improve their circumstances. There is a risk that the ‘debt vultures’ take advantage of people with a poor history trying to get credit and charge very high fees or interest rates.
TODAY: Are there things people can do now to prepare?
CANION: No-one will ever care more about your money and your credit rating than you, so take some time to review your current loans. Get a free copy of your current credit history from one of the online credit agencies, so you know exactly where you stand. Do whatever you have to do not miss any repayments from now on. See it as an opportunity to improve, because good behaviour will be rewarded.