Credit reporting changes will actually benefit consumers: Smartline

Credit reporting changes will actually benefit consumers: Smartline
Jennifer DukeDecember 7, 2020

The new credit reporting system may actually benefit a number of consumers, with those who lower their finance costs set to be rewarded, according to Smartline Personal Mortgage Advisers.

While the changes to credit reporting have received some criticism in recent days, including from Property Observer readers, Smartline’s Michael Daniels said that it’s increasing transparency and therefore more attractive terms for low risk customers.

With the changes to the Privacy Act coming into place as of March 12, the ‘negative’ credit reporting system will be no longer. More detailed information will be at the hands of credit providers.

“This means they can make better informed decisions about an individual’s financial situation and the likelihood of them not meeting their obligations,” said Daniels.

“Those who are viewed as not being a strong manager of their money will most likely either find it harder to access funds and/or pay a premium in the form of higher rates.”

The main changes to be aware of:

  • Information about your monthly repayment conduct (i.e. whether or not you have paid on time) over the past two years can now be reported.
  • If you apply for credit, the decision (declined or approved) by the credit provider can now be reported.
  • The current limit on all of your credit cards (and other credit facilities) can now be reported. This also means that if you get a limit increase, this can now be reported on your credit record.
  • The repayment term and repayment type on all of your credit facilities can now be reported.
  • A credit provider can now also provide an opinion that you have fraudulently attempted to get credit or fraudulently evaded your obligations to repay credit, or that you do not intend to comply with your repayment obligations.
  • Credit defaults can be lodged on any outstanding amounts over $150 if you are more than 60 days behind on your repayments.

Source: Smartline

The finance industry has been following the lead of the insurance industry when it comes to determining pricing based on risk, he said, with lower LVR borrowers able to secure better rates.

“The overall cost of credit fraud in Australia is quite high and this new system could go a long way toward reducing the cost of credit for the majority who do the right thing,” he said.

Historical information prior to March 12 will not be included.

jduke@propertyobserver.com.au

 

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

Editor's Picks