As Australia moves full steam ahead toward a positive credit reporting model, two-thirds of bank customers aren’t aware of what that means for their financial information, recent findings from credit bureau Experian has shown.
In the 2017 budget announcement, Treasurer Scott Morrison said the government would “legislate a mandatory comprehensive credit reporting regime if credit providers are not reporting at least 40% of their data by the end of 2017.”
This comprehensive credit reporting is expected to help borrowers with a track record of good money management secure competitive loans, while keeping less savvy borrowers from slipping into unmanageable debt.
It may also be helpful for those looking for a better deal on products such as personal loans, especially as peer-to-peer lenders - many of which assign borrowers tailored interest rates based on their credit score - rise in popularity.
“The transition to broad positive data sharing will impact borrowers in a number of ways, but importantly, credit providers in Australia will likely soon be assessing your credit repayment history,” said Experian Managing Director, Suzanne Steele.
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According to Experian, despite the fact that lenders have now begun to share new positive credit data with credit bureaus, 66% of Aussies weren’t aware the changes had taken place. Most had never even checked their credit score, including those who didn’t know how to, didn’t know what a credit score is or who just “hadn’t got around to it yet.”
Aussies also weren’t quite clear just what affected their credit score and how. When it came to damaging behaviour, 70% were able to correctly identify “not paying a bill for so long a debt recovery agency contacts you,” as something that would negatively impact their credit score.
On the other hand, building up a good credit history was more of a mystery - 86% incorrectly believed paying electricity or water bills on time improved their score, while believed high value assets gave them a boost and others were under the mistaken assumption that a pay rise would also raise their credit score.