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:

• The type of credit accounts you have, such as credit cards or personal loans.
• The credit limit that lenders have given you on those accounts.
• The dates your accounts were opened and closed.
• Your monthly repayments over the previous 24 months, such as mortgage and credit card repayments, with the report showing whether you paid the minimum amount due on time or not. (Only licensed credit providers will be able to see this, not telecommunication or energy companies.)

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:

• Your applications for credit, such as personal loans or credit cards.
• Your missed monthly repayments, whether they remain unpaid or were paid late.
• Any serious credit infringements.
• Your personal details, including name, address and date of birth.
• Any publicly available legal information about your financial status, such as insolvency, court judgements, company directorship details, etc.

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.