It has now been a number of months since Veda Advantage implemented changes to credit reporting, the question is are these changes proving to be positive? It’s taken sometime for these changes to start filtering into the credit reporting system and we are only now beginning to see how credit files are presented under this new reporting platform. There is little doubt that credit files are now more comprehensive and contain a lot more information about credit activity, which from a credit provider’s point of view is a welcome change. So are the credit reporting laws working?
Prior to these changes a credit provider had limited information on which to base a decision. Other than negative credit listings such as payment defaults or Court Actions the only other point of reference was past credit enquiries. Prior to these changes to credit reporting which took effect on March 4th 2014, a credit enquiry was recorded each time a person or company applied for credit. Many people were not aware that even applying for a credit card online would result in an enquiry being recorded in their credit file regardless of whether or not the credit was ever extended.
Credit enquiries were a challenge for credit providers as although they could see what the applicant had applied for in the past, they couldn’t see how credit was approved or extended. Because of this many people had their applications for finance declined; it was not a case of them having a bad credit file but more of an incomplete one.
In my opinion one of the most positive changes to credit reporting is the provision for more information to be recorded on a credit file. Critical information that was previously not included such as if the credit was approved or declined, is now recorded. Given this information is now available to credit providers they are in a much better position to make responsible and appropriate decisions with regard to credit policy and I would hope that this will lead to more credit worthy applicants being approved for credit. There are aspects of the new credit reporting laws that are more controversial such as the recording of late payments in as little as 14 days late, however I believe the provision for more information to be recorded in a credit file is a positive change for borrowers and credit providers alike.
Only time will tell how other changes to credit reporting will unfold, however for the most part I feel credit reporting reform was well overdue and will help bring Australia in line with what most of the world is doing when it comes to recording this type of data.
John Dickinson
Clean Credit Pty Ltd