If you have ever applied for a loan or credit of any kind, there is a fair chance that the enquiry would have ended up on your personal credit report at some stage. Credit providers use this information to assess your ability repay a loan, and defaults on your credit report are a major roadblock in any new loan application.
What is on my report?
Generally your credit report will contain personal information relating to you credit, address and personal history, the details of any debt payment arrangements you have entered into and details of any credit you have applied for.
The report will also contain information on any defaults or other credit infringements that you may have incurred, and any defaults reported will remain on your credit report for at least 5 years.
In the event that you do default on a payment, the credit provider may only place this on your credit report if;
- The default amount is $150 or more
- You’re a confirmed “missing debtor” or “clear out”, which means that your creditor can’t get in contact with you, or
- 60 days or more have passed since the due date for payments, and
- The creditor has asked you to pay the debt either in person (by phone), or in writing to your last known address
However, recent changes in the law that are due to come into effect from 12th March 2014 will see information about your repayment history listed alongside your default history.
Essentially this means that just one late payment on your credit card, car loan or any other missed repayments that you don’t pay within just 5 days could end up on your credit record.
This new change to credit reporting means that it now becomes very easy to end up with a mark next to your name for not paying your bills on time. While one missed payment may not be cause to be over alarmed a string of similar incidents will have any potential lenders questioning your ability to repay a loan.
According to the credit agency Veda, up to 80% of consumers have never accessed their credit report, so if you think you might have a few skeletons in the closet when it comes to your credit history it is always best to gain a copy of your credit report before applying for any loan.
Gaining A Copy of Your Report
If you wish to gain a copy of your report there are several providers which can provide this for you. You have the right to gain a free copy of your report once a year if you can wait ten days for the report to be arrive. You can also gain a free report if you have been denied credit due to a bad credit report in the last 3 months, but again it is a ten day wait. Alternatively you can pay for a copy of the report and this is usually emailed through to you in a much shorter timeframe.
In general the new changes will allow younger people with no real credit history to show that they do have the good credit habits to repay a loan. The new reports will show on time payments of phone bills ect, allowing any prospective lenders to gain a picture of the applicants repayment habits.
The key thing to remember is to make sure that you can make repayments when they fall due, and if not let the credit provider know so that other arrangements can be made. From now on just burying your head in the sand until the late notices start to arrive will come back to bite you further down the track, as you may not default on the repayment, but the repayment history will be noted on your records.
If you want to gain a copy of your credit report, or for any further information on your rights regarding your report please visit the ASIC money smart website for a list of providers.