Many of our readers will be unaware of it, but Australia’s credit reporting system has undergone significant changes this year. What’s more, if you are planning on applying for a homer loan, or even refinancing your existing mortgage, it is important that you are aware of these changes as they could have an impact on your credit score and the information that lenders will use to assess your credit application.
Changes to credit reporting
Under the previous system, your credit score was largely determined by your record of making payments that were late by more than 60 days. However, the new system which is known as ‘comprehensive credit reporting’ will now show whether you’ve made your payments on time for your accounts like your credit card, home loan, personal loan or even your mobile phone account.
The new system means that the consistency of your repayments will now have far more impact on your credit score. The good news is that, in return, you have will also more rights relating to access to your credit report and the information it contains.
What if your credit score is wrong?
Under the new rules, credit providers and credit reporting bodies have an obligation to help you get incorrect information removed from in your credit report. If your request for a correction is not resolved, there are internal and external dispute resolution processes that are available to consumers. Credit providers and credit reporting bodies have set time periods to respond to a complaint, and if you feel the response is unsatisfactory, there is an external dispute resolution scheme and you can ask to be referred to the Office of the Australian Information Commissioner which is an independent government agency.
What has changed?
Perhaps the biggest change that has come from the new credit reporting system is that your credit score will now be impacted by good credit habits, rather than just late repayments.
The advice we’ve heard from several people working in finance is that it is worth getting hold of a copy of your credit report well before you apply for a loan, rather than finding out what is on it via the lender. That way, you will have time to rectify any incorrect ‘black marks’ prior to a lender seeing the report. Don’t forget, you can access a copy of your credit report for free.
Of course, if you are considering applying for a new home loan with a view to making a move in the coming months, make sure you get your FREE copy of our booklet, Fatal Real Estate Traps Exposed, while you’re here on our website.