Changes to credit reporting cold affect your ability to get a loan

Late repayments to bills and loans are now added to your credit report.

New laws regarding Australian privacy come into affect this month and one change involves extra information on your credit report – this could have positive or negative implications for you, depending on how reliably you pay your bills on time. A significant negative is that late payments could lead to future credit and loans not being approved.

What is a credit report?

If you have ever applied for credit or a loan, there will probably be a report about you with a credit reporting agency. Credit providers (for example, banks) use this report to assess your capacity to repay a new loan or credit card.

Your credit report contains information about your credit history:

* credit applications including loans, credit cards, utilities and phone/internet accounts

* who has accessed your report: i.e. each time you have applied or even just enquired about a credit card, loan or new account

* personal details: current and past addresses, employment, date of birth, licence number, etc.

What are the changes?

Up until now, a black mark was added to your credit report if you defaulted (also if you have been bankrupt or had court judgements, debt agreements or personal insolvency agreements in your name), but with the recent changes, any repayment that is more than 5 days late could now also be listed. You have likely started receiving notices from the banks about changes to their privacy policy which is related to this new legislation.

What does it mean?

To date, any defaults on your credit report could seriously impact your ability to get new credit. Even multiple credit applications or enquiries could impact how banks assess you when you apply for a loan.

The new changes could have far more negative implications as the bar has been dropped in terms of what gets reported. Late payments go straight to your report and can be seen any time you apply for credit in future, and could likely mean future loans are not approved.

All credit reports now come with a score (see example below) and it is possible that banks may start setting minimum scores for loan approval.

There is good news though for people who always make their payments on time – there has been talk of bigger discounts for those with higher scores.

There is one simple way to minimise negative marks on credit reports – set up direct debits for all loan repayments and minimum monthly repayments on credit cards.

Getting a copy of your credit report

If you would like a copy of your credit report, you can apply at http://www.veda.com.au/sites/default/files/docs/veda_free_credit_file_application_form_oct-13.pdf. If you can wait 10 days, this will be supplied at no cost. If you don’t want to wait that long, I can get a copy of your report instantly at no charge, contact us at Golden Eggs Home Loans today to find out more.

If you have any concerns about your report, please let us know and we would be happy to discuss with your further.

Also if you would like some tips on how to improve your credit score, contact us by email or call 02 8095 9251 for more information.

And finally, if you find these blogs informative, you can sign up to our newsletter at http://www.goldeneggshomeloans.com.au/newsletter/ to receive further information by email on a regular basis.

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