It’s the hidden data that can have a huge affect on your financial life. Now your credit rating at your bank and other institutions is about to be shared – and the result could be good for you.
The government has just announced positive credit reporting will be mandatory in Australia next year.
What does that mean? Well, every consumer has a credit report made out by financial institutions who decide whether you’re the type of person they want to lend money to.
Before the changes, only negative information – late payments and defaults – were recorded.
Now banks and other lenders will be forced to include the good news – how you paid off that loan on time, and never missed a payment.
What’s more, they will be forced to share it with smaller lenders. What does that mean? Well, if you’ve got a good credit rating, you’ll be in demand and smaller lenders will cut you a better deal.
Treasurer Scott Morrison described the new transparency as a “game changer” for customers and lenders.
And Jason Yetton, CEO of SocietyOne, an online lending marketplace, said: “The benefits for consumers are huge as this will transform the opportunities for them to get a better deal when applying for loans and enable them to shop around for better interest rates.”
From next year, it will be mandatory for banks and other lenders to provide a consumer’s positive credit data.
Positive credit data will include the date accounts were opened and closed, credit limits, types of credit accounts and 24 months of repayment history.
- SocietyOne lists five tips on what to do with comprehensive credit reporting:-
Give lenders your full story. With positive credit data, lenders are going to get the full story of your credit history and be able to make better informed decisions about your ability to repay a loan.
- Build up your credit report faster. With positive credit information such as when you make a loan repayment on time, this will be recorded monthly. This is especially beneficial for young Australians looking to build up their credit reports.
- Recover faster from poor credit behaviour. When you make a late repayment, you will recover faster as your credit report will include positive information which is also recorded monthly.
- Access to better interest rates. Lenders will have a more in depth information about your financial standing and be able to develop new products specially tailored to your needs. This means a consumer’s good credit history will be able to get better deals such as personal loans, home loans and credit cards.
- Shop around. Now customers will be able to request their data be shared with other lenders to determine is they stand to benefit from better-priced products. This will lead to more competition in the finance sector. So the next time you go online, put in your credit score and with a click of a button, you will be presented with a range of offers to choose from which have been tailored to your needs.