Australia gears up for comprehensive credit reporting regime.
Potential home buyers may soon find it easier to obtain finance, thanks to amendments to the Privacy Act 1988.
From Wednesday 12 March 2014, reforms to Australia’s credit reporting regime will commence, allowing lenders to obtain a more balanced assessment of a potential borrower’s credit history.
Up until now, a borrower’s credit history report would show payment defaults of $100 or more that were 60 or more days overdue.
In addition, it would highlight any instances where a credit provider was unable to make contact with a borrower after several attempts, any court judgments against the borrower where a credit provider was chasing outstanding debt, any bankruptcy orders within the past seven years and the number of credit applications made by a borrower within the last five years.
However, under the proposed changes to the Privacy Act, this is all set to change.
From 12 March onwards, lenders will potentially be able to see a person’s credit repayment history on all credit accounts as well as any credit infringements they may have.
Mortgage Choice franchise owner Aaron McDonough said these changes should be seen as a positive because it means a credit provider will now be given a good assessment of a borrower’s financial situation.
“Under these proposed changes, a lender will be able to see your entire financial history – the good and bad. As such, if you have managed to pay your bills on time, this may increase your chances of obtaining a loan as it will prove to the lender that you are a model borrower,” Mr. McDonough said.
“On the flipside, if you have been known to miss a couple of credit repayments by more than 30 days, then you may have some work to do.”
Mr. McDonough said for those potential borrowers who haven’t managed to meet all of their financial obligations on time in the past, it is not too late to turn things around.
Mortgage Choice offers the following tips to help potential borrowers improve their credit position and increase their chances of obtaining a loan.
The information provided in this article is of a general nature only and in no way constitutes legal or professional advice, or specific advice in relation to any finance. In all cases we recommend you receive professional financial advice for your own personal circumstances.