Q: What is Comprehensive credit reporting?
A: Comprehensive credit reporting is a term used to refer to the credit account information and repayment history information which, from March 2014, can appear on a credit report. However, to date, not many credit providers have started to report these types of information to the credit reporting bodies. However, the Government has announced that the four major banks will from 1 July 2018 be required to start reporting the information.
Credit providers that start to report this information will be required to have notified consumers about this, and these notifications may have taken place some time ago. A consumer will need to check any changes to the terms and conditions that their credit provider has sent to them or ask their credit provider for more information.
Over time, more and more credit providers will report this information.
Importantly, only credit providers who hold an Australian Credit Licence, issued by the Australian Securities and Investments Commission (ASIC) can report and receive repayment history information. This means, for example, that information about a consumer’s repayments of their phone or utility bills won’t appear on the credit report – however, other information about that phone or utility account, such as the date it was opened, and who the provider is, may be on the credit report.
Q: What Tips Can You Give a Consumer About Managing Their Credit Effectively?
Only get credit you need and you believe you can repay
- Be clear about what credit you need and why you need it, and budget so that you know what you can afford to repay.
Speak up if you are having money troubles
- If you are having trouble repaying your debt, or think you may be getting into financial difficulties, contact your credit provider as soon as possible, as they can often help you. You can also speak to a free financial counsellor.
Complete credit application forms fully and accurately
- If you don’t disclose all information about your living and financial situation, credit providers can’t make an informed decision about your ability to meet repayment requirements.
Pay your bills off in small amounts before the due date
- You can set up a payment plan or direct debit for smaller amounts, which may avoid having to pay your bills as a lump sum when they are due.
Close down unused credit card accounts
- You will avoid fees and charges, and the temptation to use the additional credit.
Review your household bills, bank account and credit card activity statements every month
- This will help you to spot and then investigate incorrect or suspicious transactions, or find bills you may have forgotten about.
If you have more than one credit card, manage the temptation
- Carrying or using one credit card not only helps control overspending, but reduces the risk of credit card fraud if your wallet is stolen.
Use a deposit account to start saving
- Set up a deposit savings account with low or no fees, and transfer money into the account each time you are paid.
Always remember to update your address details
- This will mean that you continue to receive up-to-date account statements and do not risk missing a payment request because it has been sent to an old address.
Q: What Steps Can a Consumer Take to Manage Their Credit Report?
A: Review your credit report regularly or before applying for credit
- This ensures you can quickly spot and fix any errors (either personal or credit specific), so they don’t adversely affect your credit application.
Learn to check for simple errors on your credit report
- Check with your credit providers whether or not they disclose your information to a credit reporting body. If information for certain credit providers isn’t on your credit report but it should be, check that they have your correct details (and your name hasn’t been misspelt, for example).
Be careful who you authorise to access your credit report
- Make sure you trust that person with your financial information.
Don’t fall for an organisation who promises to “fix” your credit report.
- If your credit report doesn’t look great but it is accurate, remember the best way to ‘fix’ this is to improve your own credit behaviour.
Learn how to read and understand the information on your credit report
- Use tool such as those contained on the CreditSmart website to help you. Always cross-check the information in your bank statements to make sure the information on your credit report is correct.
Check that the information on your credit report is up-to-date
- This includes your identity information, but you should also check that information about your accounts and repayments hasn’t been kept on your credit report longer than it should be. Repayment history should be no more than 2 years old, and current consumer accounts need to be removed from your credit report within 2 years of being closed. Default listings should come off your credit report within 5 years.
Q: What Information Can’t Be Included In a Credit Report?
A: Consumers may feel unsure about a credit report, and worry that it records all sorts of personal information about them. You should be clear with consumers about what information will not appear on their credit report. The information that will not appear on a consumer's credit report includes:
- Religious or philosophical beliefs
- Health information
- Genetic information
- Racial or ethnic origins
- Political opinions
- Sexual orientation
- Membership of professional associations or trade unions
- Criminal record
Credit account balances, that is, how must a consumer currently owes on a credit account, will also not appear on a credit report. However, the credit limit for each product may appear.
Q: Who Can Access A Consumer’s Credit Report?
A: It is important that a consumer understands that their credit report is not available to anyone who asks for it. The Privacy Act sets out the rules about who can access and credit report and under what circumstances it can be accessed and used.
A consumer can also allow an ‘access seeker’ to obtain their credit report on their behalf. However that access seeker has to be someone who is providing assistance to a consumer (such as a lawyer, a financial counsellor, or someone who the consumer has consented to assisting them). It cannot be a credit provider.
If a consumer needs to check what information their credit provider collects, how they use it and to whom they disclose it, their credit provider will have a credit reporting policy document which sets this out.
If a consumer thinks someone who is not allowed to access their credit report has done so, they can lodge a complaint with their credit provider or credit reporting body. If they feel the credit provider or credit reporting body did not deal with the complaint effectively, they can then make a complaint to the external dispute resolution scheme of the credit provider or credit reporting body, or to the Office of the Australian Information Commissioner.
Q: What is the minimum amount for which a default can be loaded?
A: A payment default may be recorded on a consumer’s credit report if they don’t pay a bill or loan payment of $150 or more for at least 60 days after its due.
The payment default can only be listed with the credit reporting body if:
- The credit provider notified the consumer (at or before the time they entered into the credit agreement) that credit information would be given to a credit reporting body. This notification will normally be contained in loan application forms, and/or terms and conditions.
- The consumer was overdue in making a bill or loan payment. This means that they failed to make a payment on the day that they are required to make the payment and have still not made the payment when the default listing was made.
- The credit provider issued the consumer a written notice to recover the payment. The credit provider also informed the consumer that it intends to list a payment default on their credit report at the time it asked the consumer to make the overdue payment.
- No earlier than 30 days after sending that first written notice, the credit provider issued a second written notice to the consumer providing them with one final opportunity to pay, advising them that, within a period of at least 14 days but no more than three months, it will disclose to a credit reporting body that they consumer is in default.
- On the date that the credit provider discloses to the credit reporting body that the consumer is in default, the bill or loan payment is at least 60 days overdue.
Once a default is added to the consumer’s credit report, it will remain there for five years, even after they pay back the money. However, if they have paid the default amount, it will be noted on their credit report that the default amount was paid.
You should also be aware that, in certain circumstances, if a consumer does not make a loan repayment, a credit provider can issue them notices requiring they not only make that particular loan payment, but the entire balance of the loan as well. This is known as ‘debt acceleration’. If this happens, it may mean the default that is ultimately listed on the consumer’s credit report is for the entire balance of the loan.
Q: What Effects Will Seeking Financial Hardship Assistance Have on a Consumers Credit Report?
A: If a consumer’s hardship request under the National Credit Code (or under any applicable hardship provisions including those relating to telecommunications or utilities) has been refused, a credit provider will be required to wait 14 days after this refusal before it can list a default on their credit report . If the credit provider and consumer agree to vary the terms of the credit contract in response to a hardship request, the default relating to their inability to meet payments at that time will not be listed on their credit report. This will not prevent any further defaults being listed at a later date.
Q: What is a Credit Score?
A: A credit score is a number that is indicative of a consumer’s credit worthiness. Credit scores may be used to help credit providers, like banks or credit unions, make lending decisions about whether or not they will accept a consumer’s credit application (such as a loan application).
Credit providers may choose to obtain a credit score from a credit reporting body, or they may generate one themselves using their own internal data. A consumer’s credit score from a credit provider with whom they have a limited credit relationship could be quite different to their credit score from a credit provider with whom they have many credit products.
A lower credit score from a credit reporting body or credit provider compared with a higher credit score from the same entity means that you are regarded by them as a lower credit risk than a person who gets a higher credit score.
It’s also important to know that credit scores keep changing over time, as each credit provider and each credit reporting body obtains more up to date information or changes their formulas.