Australia gears up for comprehensive credit reporting regime
Potential home buyers may soon find it easier to obtain finance, thanks to amendments to the Privacy Act 1988.
As of Wednesday 12 March, reforms to Australia’s credit reporting regime will commence, allowing lenders to obtain a more balanced assessment of a potential borrower’s credit history.
Up until now, a borrower’s credit history report would show payment defaults of $100 or more that were 60 or more days overdue.
In addition, it would highlight any instances where a credit provider was unable to make contact with a borrower after several attempts, any court judgments against the borrower where a credit provider was chasing outstanding debt, any bankruptcy orders within the past seven years and the number of credit applications made by a borrower within the last five years.
However, under the proposed changes to the Privacy Act, this is all set to change.
As of 12 March onwards, lenders will potentially be able to see a person’s credit repayment history on all credit accounts as well as any credit infringements they may have.
These changes should be seen as a positive because it means a credit provider will now be given a good assessment of a borrower’s financial situation.
“Under these proposed changes, a lender will be able to see your entire financial history – the good and bad. As such, if you have managed to pay your bills on time, this may increase your chances of obtaining a loan as it will prove to the lender that you are a model borrower,”
“On the flipside, if you have been known to miss a couple of credit repayments by more than 30 days, then you may have some work to do.”
For those potential borrowers who haven’t managed to meet all of their financial obligations on time in the past, it is not too late to turn things around.
Mortgage Choice offers the following tips to help potential borrowers improve their credit position and increase their chances of obtaining a loan.
Automate debts: If you want to make sure you meet all of your financial obligations each month, it pays to set up automatic debits
Close it down: Close down any credit facilities you don’t need. Do you have a credit card that you don’t use but you have for ‘just in case’ emergencies? If you do, get rid of it.
Review your file: It is important to keep a close eye on your credit file. By regularly reviewing your credit report, you can keep track of what is showing up and change any information that is inaccurate. You can obtain a copy of your credit report from sites such as mycreditfile.com.au.
Be diligent with expenses: If you move out of share house accommodation, make sure your name is removed from any bills. Don’t keep your name on anything it doesn’t need to be on.
If you want to learn more about your home loan options, call 5502 8906 or click on the 'contact us' tab at the top of the page.