Historically, Australia has operated under a negative credit reporting system for the purpose of assessing financial and credit worthiness. This meant that an individual’s credit report only included information such as past credit enquiries, delinquencies and other major and minor financial infringements. Instead of highlighting praise worthy credit use and near perfect payment history, Australians were evaluated by all the bad information their credit report included. That, however, is about to change.
Comprehensive Credit Reporting
Over the course of the last few years, reforms in credit reporting have been developed in an effort to provide borrowers and lenders alike with more detailed current and historic credit information. The new regime, known as comprehensive credit reporting, allows for the addition of positive information in an individual’s credit report, including on-time payments over the last 24 months as well as detailed information on the number of credit cards and loans held along with balances and payment terms. A comprehensive credit report will include the same information that negative reporting had, such as information on all credit applications made within the last five years, bankruptcy filings for the last seven years and overdue payments past the 60 day mark. However, the addition of positive information provides lenders a much clearer picture of a borrower’s total credit history.
Borrowers will benefit from comprehensive credit reporting due to its inclusion of more information from past and current lenders. With more details on consistent repayment and adherence to previous credit agreements including credit card and personal loan terms, banks as well as alternative lenders are able to use this report to offer potentially better financing terms to individuals who may have otherwise been declined for a loan or new credit account. When lenders are able to view both the good and the bad, borrowers can easily show where improvements have been made if there was a repayment issue or bankruptcy in the past.
Although comprehensive credit reporting will be beneficial for some borrowers, others may need to take an in-depth look at their current credit report. If delinquencies have been commonplace or if there are still outstanding balances yet to be worked through with a previous lender, this comprehensive credit report will not provide much of a benefit for that borrower. In order to ensure you reap the greatest reward from the comprehensive credit report – by way of more favorable lending terms including lower interest rates – it is necessary to start to working through the negative information found on your current credit report. Take steps to make amends with lenders and determine how you may be able to pay back your outstanding debt in a timely manner so that you can take advantage of the new comprehensive credit reporting reforms. If it’s difficult and complicated to do them on your own, you can seek help from professional services that exclusively deal with cleaning up credit files.