77% of Aussies know credit history used by lenders: Poll Paying bills on time more important than ever, under new rules from today

Sydney, Australia: 12 March 2014 – Even though paying bills on time is now more important than ever, 7 out of 10 Australians aren’t aware of major changes to Australia’s credit reporting system that can affect their credit rating, according to a ReachTEL[1] poll for Veda, the data analytics company and leading provider of credit information and analysis in Australia and New Zealand.

From today, the Privacy Amendment (Enhancing Privacy Protection) Act 2012 takes effect, incorporating changes to the Privacy Act 1988 to update Australia’s credit reporting system. Under comprehensive credit reporting (CCR), details of your personal credit accounts, and whether you’ve paid your credit card, mortgage or personal loan on time, may be captured by the consumer credit bureau.

The ReachTEL poll for Veda found that while 77% of Aussies know their credit history is used by lenders when deciding whether to give a person a loan, most people don’t know about the new credit reporting system.

To make it easier for Australians to understand and manage their credit profile, Veda launched its Equifax Score[2] ranking in October 2013 – a personal credit score offering that helps consumers understand how they are viewed by lenders.

Veda says the new CCR system is good news for consumers as it’s more balanced and transparent, and means that people can now establish a good credit profile, by paying bills and loans on time.

Angus Luffman, General Manager of Consumer Risk at Veda said: “The amended Act allows for additional consumer credit reporting information to be shared with credit bureaus and therefore between lenders. Among the many benefits to consumers, a person who makes loan and credit card repayments on time each month might be able to improve their credit profile more quickly after an adverse financial event, like a credit default. In the past, personal credit files included only ‘negative’ information, like defaults.

“Veda will continue to focus on helping people better understand this significant change in credit reporting. Our Equifax Score ranking, launched late last year, is one of the tools people can access to help understand and manage their credit profile.”

In time, up to 24 months’ repayment history can be recorded on an individual’s credit file by the consumer credit bureau. It includes good payment history as well as recording loan and credit card repayments from five days late. Data on account information and repayment history will be updated monthly. In the long-term, CCR may even enable people to negotiate a better deal with credit providers.

Mr Luffman said CCR also supported the credit industry’s responsible lending obligations. “Credit providers like banks and finance companies will have a more complete picture of a person’s credit exposure and history, so they can better assess a person’s ability to repay debt.”

There are also additional consumer protection provisions, embedded in the Privacy Act. The changes are regulated by the Privacy Commissioner. These include rights of access, dispute and correction of information. The use of the information is limited to consumer credit purposes – be that for assessment, review or recovery of overdue debts – and is specifically prohibited for marketing purposes. Also, repayment history information may only be shared and accessed by licensed credit providers. The only additional information able to be shared accessed by non-financial lenders such as telco and utilities will be account information – account type, open status and credit limits.

Ahead of the CCR changes, Veda launched its Equifax Score ranking – the only one available to consumers – in October 2013 to help people actively manage their credit profile. An Equifax Score (number between 0 and 1,200) summarises a person’s credit history at a specific point in time. The higher the Equifax Score, the better an individual’s credit worthiness.

What consumers should do

A good credit history generally makes a person more attractive to credit providers. Under CCR, individuals will be able to show recent good credit behaviour by making credit repayments on time. For those who are sometimes late paying a mortgage, credit card or personal loan, now is the time to be proactive, pay bills on time and adopt good financial habits.                                                      

Practical tips for consumers:
1.       Pay bills and loans on time. Consider setting up direct debits and schedule loan repayments for your pay day. 

2.       Keep track of your credit commitments. Only apply for credit if and when you need it.

3.       Having trouble meeting repayments? If you are in financial difficulty talk to your credit provider who may assist.

4.       Get your Equifax Score and credit report and check the information is correct. You can even monitor changes through Credit Alerts and help protect your identity. Visit www.veda.com.au