Australians nervous about what their credit report would reveal
Comprehensive credit reporting comes in effect today as part of changes to the Privacy Amendment Act, which means that for the first time banks and other credit providers will be able to view positive as well as negative data when making a decision to grant credit.
According to research by information services company Experian, 74 per cent of Australians are unaware of the new legislation and that 85 per cent of Australians have never accessed their credit profile before.
The extra data collected on your credit report will now include: account opening and closing dates, account type (credit card, mortgage, etc), credit limit and 24 month repayment history.
Experian's Managing Director of Credit Services Andy Sheehan said that credit reports are not yet a strong part of Australian culture but that the changes are good news for Australian consumers.
"It means that for the first time, their good behaviour on their financial accounts - such as making on-time payments of mobile and credit cards bills - can be recognised and taken into account when a lender is considering their application for credit," he said.
Of the 15 percent of Australians who had accessed their credit profile in the past two years, 42 percent said they were nervous about what it might show.
"Consumers should remember, one free report a year could save them months of credit grief," said Sheehan.
Here are Mozo's top 5 tips for maintaining a top credit report:
1. Automate your bill payments. Either get your provider to direct debit your account on the due date or as soon as you get your bill, schedule a payment via online banking for the due date.
2. Keep credit card balances low. Credit providers now have the ability to check credit card limits and repayments history to see how well you manage your debt. It is a good rule of thumb to keep your balances within 30% of your credit limit.
3. Close unused accounts. All opened accounts are considered to be potential debt so if you have a card in your wallet you no longer use, close it.
4. Shop around for the best deal before applying. Each time you make a new credit enquiry it will be noted in your credit report. While this in itself isn't enough to stop you from getting approved for new credit, it is better to do your shopping around before making applications so that your credit report remains as clean as possible.
5. Watch your credit report. It is a good idea to get a copy of your credit report to make sure all of the information collected on your file is correct. Be on the lookout for outdated information, unfamiliar enquiries and any billing or payment issues that have been rectified but not cleared up on your file.