Credit reporting changes will boost thousands of credit scores this February

Come Feb 14, getting a home loan, personal loan or even a business loan could become easier for thousands of Aussies, as amendments to credit reporting standards will see civil court filings no longer reflected in one’s credit scores.

The Office of the Australian Information Commissioner (OAIC) has approved the change to the Credit Reporting Code 2014. According to the new code, writs and summons will not be considered publicly available information and will be scrapped from individual’s credit reports.

Australian Information Commissioner and Privacy Commissioner Angelene Falk said the changes will balance the need for efficiency in credit reporting with the need for individual privacy.

“The amendments limit the types of information that can be included on credit reports, to the advantage of consumers, by ensuring that publicly available information which is not relevant to an individual’s creditworthiness is not included on credit reports,” she said.

Who stands to benefit?

Prior to these changes, anyone who had a claim filed against them would see their credit score take a hit, even if the claim didn’t make it to court, let alone result in a judgement (an order by a magistrate or assessor when deciding a case). 

This was a major source of frustration for business owners in particular, with many finding themselves unable to negotiate on interest or outright rejected when applying for necessary business loans. 

When the new legislation comes into effect mid-February, only judgements will be recorded on a person’s credit file, and they must be credit related in order to impact their credit score.

MyCRA Lawyers CEO Graham Doessel said the rules will also be appreciated by mortgage brokers, who would constantly find themselves on the backfoot when negotiating home loan deals for clients who had trivial court judgements to their name.

"Tens of thousands of Australians have had their credit rating destroyed, businesses and financial security put in jeopardy all because civil court actions treated defendants as guilty till proven innocent when it came to their credit rating,” Mr Doessel said.

Will I have to do anything?

If your credit score has been tainted by a non-credit related judgement, it should automatically be removed by February 14.

But if it remains past that date, you might have to get in contact with a credit reporting bureau and ask to have it removed directly. You'll likely be required to contact each credit reporting bureau individually.

If you’re looking for more ways to improve your standing in the eyes of lenders, check out our list of things that hurt your credit score and how to avoid them. And if you’re in the market for a home loan, browse our home loan comparison page for a look at what’s available.