In March 2014, the new reforms to the credit reporting system will commence.
Currently, Australia operates under a negative credit reporting system, which means that only credit enquiries and credit infringements are recorded. The following information would be included on your report:
  1. A payment default of $100 or more that is 60 days or more overdue
  2. A clearout – If you owe money, but the credit provider was unable to make contact after several attempts
  3. A bankruptcy order within the last seven years
  4. Details of credit applications made in the last five years.
However, the new positive credit reporting system has a purpose of providing credit agencies with a more balanced assessment of a person’s credit history. As well as credit infringements, a credit provider will also be able to see the last 24 months of credit repayment history on all open credit accounts that the applicant holds.
These changes will be implemented so as to help give a better assessment of an individual’s financial situation. Not only will credit providers be able to see the bad, but the good as well. 
So, how will this affect you?
If you work hard to keep your finances in order and pay your bills on time, this reform will be a great benefit for you. Credit providers will be able to see you are a model borrower, helping your chances of obtaining a loan. Therefore, it is most important for you to continue to pay your bills on time to ensure your report is kept clean.
However, if you know that you have missed a few repayment deadlines, you may have work to do. Come March next year, credit providers will be able to see your repayment history as far back as December 2012, so the quicker you can get your finances in order, the better.
This new credit reporting system is a great change for borrowers as it will encourage Australians to make an effort to keep their finances in order. This could result in better household budgets and even more savings for couples and families.   
Some ways that you can improve your financial position include:
  • Be responsible in a share house:  If you move out, make sure to take your name off any bills.
  • Regularly check your credit report:  This will help you keep track of the information in case any mistakes are recorded by accident.
  • Most importantly – pay your bills on time.
  • Set reminders – It doesn’t matter whether you use an app on your phone or the traditional post it on the calendar, whichever system works best for you will help keep you on top of your bills. It may even help to set the reminder a few days before so if you do forget, you still have time to make the payment.
  • Be open with your partner– Communication with your partner is vital when it comes to your finances. You need to sit down and discuss what bills are due when and who will pay them. By having a second person keeping an eye on the finances, there will be even less of a chance of a missed repayment.
Although this new credit reporting system will come into effect next year, there is still time for you to turn your finances around to become a model borrower.

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Anouska Linz

Anouska Linz is Manager, Online Sales at State Custodians and has over 10 years’ experience in financial services, both in broking and banking. Holding a bachelors degree in accounting, Anouska quickly discovered a love for mortgage lending and assisting people to achieve their home ownership goals. She leads a team of highly experienced lending specialists who are passionate about finding lending solutions which result in real wins for the customer. She is also a massive netball fan.

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