Changes to credit reporting in the New Year.

Do you know how your credit file is? Did you even know you had one? Most lending institutions; be it banks, or utility providers will view your credit file to assist them in making a decision whether to lend to you or open an account.  Did you know that in a recent survey conducted by Veda that around 80% of people have never even accessed their own credit report. This is alarming and seems ridiculous considering it’s free to do so.

As of March 2014 new laws will be introduced allowing more detailed information to be included on your credit file. This extra information can be backdated from December 2012.

Your credit file at present will show minor credit infringements through to serious credit breaches. The report will show how many times you have applied for credit, and if you have defaulted on any previous credit / loan accounts. That information will remain on your file up to 5 years! A serious credit infringement or court action on your file can show that information for 7 years. With the current system your loan must be overdue 60 days or more with an outstanding balance of no less than $100 to have a default placed on your credit file.

So the new laws will allow reporting entities, (Credit providers) to apply much more detailed information on you. I believe good and bad. Some of the stored information accessible may be the type of accounts you have, including the credit limit when it was opened and details of overdue accounts. The changes will soon allow a credit provider to report if you have fallen behind in single payments. This means you will not have as much grace as you had previously.

Your credit file uses a scoring system and the more enquiries you make or the more payments you miss will affect your credit score. Now missing one payment may affect you adversely.

Veda is only one reporting agency. There are two currently in Australia and soon possibly three. Dunn and Bradstreet is another agency and what can add to frustration is the fact that they do not share information!

Constantly applying for finance won’t do you any favours either. So look before you leap and make sure the deal suits you. The best advice is paying your bills on time, don’t over commit and never bury your head in the sand. 7 years is a long time.

The system is designed to give a clear picture for all lenders / credit providers when processing an application. This can also be of concern regarding how finicky some credit providers want to be. So now more than ever is a good time to be on the right side of your credit provider and to always be in contact if you think you may miss a payment.

To find more about your credit report go to mycreditfile.com.au and check out Dunn & Bradstreet so you know where you stand. Some information may not be accurate so checking out your credit file can be a good way of seeing what’s going on and if you need to report incorrect data. Web sites such as moneysmart.gov.au are a good way start trying to repair a bad credit history. It has been reported that a large amount of credit defaults are lodged by phone companies.

There have been some changes to the credit act also so all lenders must be licenced. Never enter into an agreement with someone who is not licenced.

We at SCM Beenleigh have been lending for over 12 years. We have been proud of the fact that we will give you a fair go! We will stop short of guaranteeing finance however we will usually overlook previous minor credit issues. As long as you can display to us that you can afford a loan to start with.

So want to know more? Why not get in touch with either Jess or myself and see what’s on offer or go to http://www.cars-4sale.com.au/car-finance

Steve Sharp