If you’ve previously been refused finance due to a poor credit score, you’ll be pleased to know that the system for generating consumer credit reports has changed. The recent amendment to the Privacy Act 1988 (the Act) – the legislation governing consumer credit reporting in Australia – has created a more balanced system that is widely perceived as being fairer to consumers.
In brief, the credit bureaus responsible for collecting credit information about consumers now have to collect positive information as well as negative. This means that credit providers (lenders), who access your credit information when deciding whether to make a loan or not, will now have a broader range of information available to them.
This change, to what is termed a 'comprehensive credit reporting system', finally brings Australia into line with the majority of developed nations. The major benefit of this more balanced system is that your positive credit background is now considered along with the negative, meaning it is easy to improve your credit score.
The new information that is automatically submitted by lenders includes:
This is now added to the existing information, which remains unchanged from the previous negative reporting system. These details will still be held on file:
This makes it far easier for you to demonstrate your credit worthiness simply by managing your repayments effectively, as the system will automatically record your good credit behaviour. Another benefit is that if you’re young or new to employment in Australia, it’s now easier and faster to build up a positive credit profile.
Meanwhile, credit providers such as car finance companies can make better informed decisions, offering you the best arrangements at the most appropriate prices.