January 28, 2015
Did you know even know that you have a credit file that details any and all of your credit history?
Don't worry if you didn't, you are not alone. A recent study by VEDA international found that 59% of people interviewed had never heard of credit reporting. What’s more once they knew about it, 79% thought that it was important, and 9 out of 10 people wanted to know about the changes that are taking place to the reporting of their credit score.
First thing, DON’T PANIC!
Secondly, Protect your credit score!
Do you have a credit card? Do you have a Personal loan, car loan or mortgage? What about a store card or interest free purchase like Harvey Norman or Myers? Then you have a credit file.
Currently, your credit file contains a record of these credit applications. It also contains details of any overdue debts, bankruptcy or court writs that have occurred within the last 7 years.
This file is used by various credit organisations including banks, credit unions and other financiers such as mobile phone companies when deciding whether to accept an application or not. If you are rejected for a credit card, or a bank knocks you back for a loan, it could be because of an outstanding debt on your credit file.
Recent changes to the credit reporting now means more of your credit history can be reported. The most significant change is that participating credit institutions can now report on your repayment history, month by month over 24 months.
This report shows whether you have paid on-time, late or defaulted on any credit.
These changes have brought Australia in-line with the rest of the world when it comes to credit reporting. It is regulated and privacy is paramount.
Whilst the scope of reporting has expanded, currently lending institutions have not signed up to the new system. For these institutions to access the data, they must also provided the same level of data. These systems are expensive to set up, but it will only be a matter of time before most of the larger institutions will be using it.
Protecting your score means ensuring your repayments are made on time. Monthly repayment reporting will apply to all of your credit facilities, so make sure you are making at leadst the minimum repayments.
What about my mobile phone?
There has been some fear-mongering about phone and utilities companies. The new comprehensive credit rating does not apply here, however defaults will continue to be listed.
For more information, visit https://www.veda.com.au/