This is a hotly debated question. Will the changes to credit reporting be a good thing or a bad thing for consumers?
Different people have different viewpoints however one things for sure, big changes are underway and these changes will affect people’s ability to secure finance.
While there are a number changes taking place, one the biggest is the inclusion positive reporting.
Positive Credit Reporting in Australia
At the moment other than credit enquiries, only negative events such as Payment Defaults and Court Actions are recorded on a credit file. This is all about to change. From next month all current credit facilities including repayment histories will be displayed. One of the more controversial changes to the credit reporting platform is the ability for a credit provider to record a late payment if it is an little as five days past the due date. Currently in most cases a credit provider could only record if an account was in arrears if payments were sixty days or more behind, this took the form of a payment default. While Veda Advantage is saying that the recording of a missed payment will not have the same impact on a credit score as a Payment Default if would be fair to assume that credit providers will not look kindly on late payments.
It’s is interesting that Veda Advantage will be recording late payment history in the positive area of a credit report.
Is the recording of repayment histories on a credit file a good or bad thing?. This really depends on who you ask, from a credit providers perspective this additional information can help determine an applicant’s credit worthiness. The real questions is will lead to more or less finance application approvals.
This really depends on the credit providers attitude at the time. At the moment many credit applications are declined due to a negative listing such as payment default. Even one small paid default to say a telecommunication company can be enough for a credit provider to decline an application. This is largely due to the fact credit providers currently have no positive data to offset such an event. With the introduction of also including a person’s repayment history this does have the potential to offset a negative event and perhaps change a credit providers perspective on a credit application, this could be in favor of the applicant.
One point of concern however is should a person not have a negative credit listing on their credit file but they has been late paying a number of bills in the past a credit provider will now be able to view this information which could prove detrimental when trying to obtain credit.
It should be noted that credit providers have been storing this data for two years and when these changes come into effect next months a person’s past payment history will be shown on their credit file, including late repayment history.
It will take time for these changes to take effect and filter through peoples credit file and only time will tell if these changes prove to be a possible or negative thing for consumers.