Significant changes to credit reporting are about to take effect.
A straight-talking information website, Credit Smart, has been set up to explain the changes. We've set out below some information from the website which explains some of the changes:
"In March 2014, Australia's credit reporting system underwent significant changes as a result of reforms to the Privacy Act 1988. It's important that you're aware of these changes as they will affect what is in your consumer (personal) or commercial (business) credit report and what information can be accessed by others about your credit history which may impact your ability to obtain finance in the future.
A credit report is prepared by a credit reporting body at your request, or at the request of a credit provider when you apply for consumer or commercial credit. Credit reports contain details about your credit history and certain other information about you, including whether you are, or have been, bankrupt and court judgments against you. Generally the information contained within it is used to review what credit applications you have made in the past, it won't actually state whether or not credit was granted or accepted but will include any listings for unpaid credit amounts which have been notified to you and then reported to the credit reporting body.
Since 1991, the Privacy Act has meant that Australia has a 'negative credit reporting' system. This means your credit report can contain 'negative' information about your credit history (for example, it can contain information about your notified defaults, as well as each application for credit) but it cannot contain any information that directly shows you have managed your credit well.
In the existing negative credit reporting system, your credit report can show that you have made applications for consumer credit or commercial credit (that is, credit for business purposes if you run a business). However, it doesn't normally show whether the credit you applied for was approved or not. If you have been given credit, your credit report doesn't currently show whether you kept up-to-date with your repayments, but it can show if you have defaulted on your credit obligations.
That will change from March 2014. In the new comprehensive credit reporting system, your credit report may contain more information that can be accessed by you and by those organisations specifically permitted by the Privacy Act. Additional information that can now be contained in your consumer credit report include:
- The date and type of credit accounts you opened
- The maximum amount of credit available to you under each credit account
- Basic information about the terms relating to the credit repayment, such an interest only term offered
- Default information, for a payment of more than $150 that is 60 days overdue and you have been served two notices requesting payment
- Variation arrangements that you have entered into with a credit provider because of a default
- Information about whether monthly repayments have been paid on time over the last 2 years (only Australian Credit licence holders can supply this information, ie not utility providers).
It is expected that these changes will happen gradually as different credit providers consider whether to participate in this comprehensive credit reporting option."
For additional information on Credit Reporting, review the CreditSmart.org.au website.
Managing your credit effectively is important for both individuals and businesses, speak with your Hanrick Curran Adviser or ask for Matthew Beasley on 07 3218 3900 to discuss a review of your current cash flows and finance arrangements to help you manage your credit effectively.