Comprehensive credit reporting

Comprehensive credit reporting

How does comprehensive credit reporting impact my credit report and VedaScore?

The new data allowed under comprehensive credit reporting is now appearing on many credit reports. To find out more about the changes to the way information appears on your credit report please view our common questions.
A sample of a Your Credit and Identity pdf report is available here.

What changes does Comprehensive Credit Reporting bring?

The Privacy Act 1988 (the Act), which is the legislation governing consumer credit reporting in Australia, has been amended to introduce comprehensive credit reporting. Comprehensive credit reporting changes the type of consumer credit information that can be collected by credit bureaus and used by credit providers when making a lending decision. This change came into effect on 12 March 2014.
Previously Australia had a negative reporting system. This meant consumer credit reports could only contain information such as credit enquiries (typically applications for credit e.g. a personal loan or credit card), the fact a particular credit provider had given you credit payment defaults and serious credit infringements. Under the new comprehensive credit reporting system positive data is able to be included on credit reports.  Most developed countries in the world operate under a comprehensive credit reporting system.
The positive data that can be included on credit reports includes account information such as the date an account was opened and closed, credit limit, type of credit account as well as 24 months repayment history. Repayment history information can only be provided by and shared with licenced credit providers - this doesn’t include telco and utility companies.
 
View an infographic of the changes and how they might impact you here.

What are the benefits of Comprehensive Credit Reporting for consumers?

The new comprehensive credit reporting system gives Australians more power to demonstrate credit worthiness and manage their credit profile.
  • Highlights good credit behaviour: You will be able to demonstrate recent good credit behaviour because the new system records if you have made your credit payments on time.
  • Faster recovery from adversity: You may improve your credit profile more quickly after an adverse financial event by showing good credit behaviour, potentially countering the impact of a default up to five years old.
  • Quicker to establish a credit report: For individuals new to consumer credit, the use of comprehensive information means that you can build credit worthiness more quickly. For example, if you are a young person or a recent arrival from overseas.
  • A more balanced system: It is a more balanced and transparent system for consumers who already have a good credit history, as well as those who previously had trouble meeting their financial commitments – as it may enable them to access quality credit where they may not have been able to previously. 
  • A better deal with providers: With more complete credit bureau information and monthly updates, having a credit profile and showing good credit behaviour will become important in accessing credit at the best price.

How does comprehensive credit reporting impact me?

From 12 March additional information is permitted to be collected, held and disclosed by credit bureaus. Once this data is supplied by credit providers, your credit history will include information such as:
  • Account open date and close dates
  • Type of credit account such as a credit card or personal loan
  • Credit limit. This is the maximum amount of credit available to you for an account. If you accept a credit limit increase the new credit limit could be included on your credit history.
  • Monthly repayment history on credit accounts such as mortgages and credit cards. This will reflect whether you paid the minimum amount required on your financial commitments each month on time or not (licensed credit providers only).
This is in addition to the existing information on your credit report such as:
  • Personal details – name, address and date of birth
  • Consumer credit information:
    • Credit or loan applications, known as enquiries
    • Overdue debts like payment defaults (paid and unpaid)
    • Serious credit infringements
  • Publicly available information such as personal insolvency information, court writs, court judgements and directorship information.
You can track your credit reporting information through Veda’s Your Credit and Identity product packages. You can review your Credit Report as well as get an understanding of your credit rating with a VedaScore.
 
In addition there are certain circumstances under which you can get a copy of your credit report for free.
  • If you have been declined on a credit application, you have the right to access your credit report free during the 90 days following the date you were declined.
  • If you have requested an amendment to your credit information and that amendment has been made.
  • Once every 12 months

Case studies

Credit default
Chris lived in a share house four years ago and when he moved out he didn’t take his name off the phone account and his former housemates did not pay a bill. As a result he ended up with a default on his report. This remains on his credit report for five years and it comes up on any credit check run on him, which is why he’s having difficulty getting a car loan.
Solution
Settle the default amount and be vigilant about paying bills and loans on time (under new rules, “positive” credit behaviour can help negate past “bad” behaviour).
Tips
  • Consider direct debits or schedule payments to pay bills
  • Notify credit providers of your new address when moving
  • Make sure you cancel or move any utility services when you are moving
Shopping around for credit
Anna’s family is expanding. She has bought white goods and new bedroom furniture on interest-free finance and is shopping around for a personal loan for a car. To get the best deal, Anna has applied with a few lenders and finds herself being declined. What she doesn’t realise is each time she makes an application, it’s recorded on her credit report – so although she’s just shopping around, she “reads” as someone in financial stress. This stays on her credit report for five years.
Solution
Anna should do her research before she applies for credit, and apply only when she really needs it. Under new rules, credit providers will have a clearer picture of Anna’s credit commitments as her credit report will not only show credit applications but open and closed accounts as well as credit limits.
Tips
  • Research online and speak to lenders rather than applying each time – this way you avoid a credit check each time which will appear on your credit report.
  • Be wary of “churning” credit by constantly switching providers for credit cards, personal loans, mobile phones and electricity contracts.
Stolen identity
Rachel has been diligently saving and has found her dream apartment. She always pays her bills on time and feels confident she will get a loan. But she’s knocked back due to a default on a personal loan she never applied for. Her identity has been stolen.
Solution
Rachel should get a copy of her credit report and contact the credit provider to whom the application for credit was made so they can investigate and take action. Not only does she need to contact the police and report the crime, she also needs to inform relevant Government agencies depending on what information has been stolen (driver’s licence, passport, citizenship papers, Medicare card, birth, marriage and change-of-name certificates, tax file number, superannuation or pension). Under the new comprehensive reporting rules, Rachel can request a ban on her credit report, which means it can’t be shared unless she expressly consents in writing (for an initial period of 21 days).
Tips
  • Shred documents, lock your mailbox, don’t share credit card details on social media sites, protect PIN numbers, and install anti-virus software.
  • Get a copy of your credit report and consider credit alerts that notify you when there’s a change to your credit report.
Find out where you stand when it comes to credit with one of our Veda Credit and Identity packages today. Or find out more information about your credit history and the information on it here.

What can I do?

Here are some tips on how to keep your credit report as healthy as possible under the new comprehensive reporting system:
  1. Pay bills and loans on time – consider setting up direct debits and have loan repayments scheduled 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 your repayments? – If you are in financial difficulty talk to your credit provider, they can likely assist you.
  4. Get your VedaScore and your credit report and check the information is correct. You can even monitor changes through Credit Alerts and help protect your identity. Visit veda.com.au.  

Common questions

What new information is included on my credit report?
Credit account information including:
  • Account open date and close dates
  • Type of credit account such as a credit card or personal loan 
  • Credit limit. This is the maximum amount of credit available to you for an account. If you accept a credit limit increase the new credit limit could be included on your credit history. 
Monthly repayment history on credit accounts such as mortgages and credit cards. This will reflect whether you paid the minimum amount required on your financial commitments each month on time or not. 
 
What is repayment history information?
Repayment history information is whether the minimum repayment on a credit account, like a credit card, personal loan or mortgage has been made on time (or within a 14 day grace period) and if not, how late the payment was made, for a particular month. Only licensed credit providers can share and receive repayment history information. This doesn’t include telco and utility companies. Repayment history information is recorded monthly and can be held on your credit report for 2 years.
 
Why can’t I see repayment history information for one of my accounts on my credit report?
Veda anticipates collecting this information over the coming months from credit providers. Generally, this means that you may not see changes to your credit report immediately. Any credit account information (Consumer Credit Liability Information and Repayment Information) we may collect from credit providers as of March 2014 will not be available in your report until updates to our system are made over the coming months. 
 
It is also important to note that comprehensive credit reporting is an opt-in system and not all credit providers will elect to share positive information. This is why you may see information from some lenders and not others.
 
Will I get a default if I pay my bill 5 days overdue?
If you pay your credit card or loan repayments more than 14 days past the due date this can be recorded on your credit report as part of your repayment history information as a late payment. This repayment history information is recorded on your credit report for a period of 2 years.
 
A default can only be recorded on your report if you miss a payment which is more than $150 and is more than 60 days overdue. Before listing a default the credit provider must have taken steps to collect the whole or part of the outstanding debt.  This means they have sent you are written notice setting out the amount overdue and seeking payment and a separate written notice advising you that the debt may be reported to a credit reporting body. A default remains on your credit report for 5 years. 
 
I always pay my bills on time, will this benefit me?
Paying your bills on time and avoiding getting a default on your credit report are positive impacts on your credit rating or VedaScore.
 
What if I pay my phone bill late?
Only licensed credit providers such as banks and financial institutions are able to disclose repayment history information to a credit reporting body like Veda. Telco and utility companies are not licensed credit providers and cannot supply or receive this information.
 
What happens if I miss a credit card repayment?
If you pay your credit card or loan repayments more than 14 days past the due date this can be recorded on your credit report as part of your repayment history information as a late payment. It is unlikely one late payment, depending upon how late the payment was, followed by making your repayments on time, will significantly impact your credit worthiness, however, a number of late payments could be an indication you are in financial stress and may negatively impact your credit report. This repayment history information is recorded on your credit report for a period of 2 years.
 
To try and prevent this, pay bills on time, set up direct debits to pay your minimum credit card balance and schedule loan repayments for your pay day. Talk to your credit provider straight away if you are having trouble meeting your repayments – they may have procedures in place to help borrowers experiencing financial hardship.
 
If information on my credit report is incorrect what should I do? 
If you notice an error on your credit report ensure you check it with your credit provider as it may impact your VedaScore or credit rating. If information is listed incorrectly it can be removed from your credit report. You can find out more through our Resolution Centre.

Protecting Consumers’ Privacy

The changes to Australia’s credit reporting system will occur following changes to the Act. The Act limits how credit reporting information can be used and disclosed both by credit bureaus and credit providers and places obligations on credit providers and credit bureaus with respect to the security of that information. In addition the Act gives you a right of access to your credit information including free access once every 12 months, within 90 days of being declined credit and when you have requested an amendment and that amendment has been made.
 
The information provided by Veda is general in nature and does not constitute legal, financial or compliance advice. Veda provides no undertakings or warranties concerning the accuracy, completeness or up-to-date nature of the information provided. We recommend you obtain your own independent advice.