Lenders are now looking closer at your character – what you need to know

Comprehensive Credit Reporting (CCR) is now in full swing, giving lenders a closer look into your financial character and highlights facilities that you may not have disclosed in your application.  The CCR shows the lender if a credit facility is open or closed, the credit limit and repayment history information on a monthly basis.   So, it’s really important that you talk to your broker about your facilities, even the ones that you may not have used for a long time.

What you need to know:

1. Be cautious of applying for credit.  Every time you apply for credit, this is reported, and affects your credit score.  So, shopping around and applying for credit cards is not advisable.  If a credit card provider declines your application for a credit card, its’s not advisable to apply to other providers hoping for a different outcome.
2. Your credit report shows if the minimum payment on your credit facilities has been made on time (or within a 14-day grace period) – and if not, how late the payment was for that month.  Only licensed credit providers can share and receive this information, so at the moment this does not include telco and utility.
3. Repayment history is recorded monthly and held on your credit file for 2 years.
4. A default can only be recorded on your report if you miss a payment which is more than $150 and is more than 60 days overdue.   Before listing the default, the credit provider must have taken steps to collect the whole or part of the outstanding debt.  This means they have sent you a written notice setting out the amount overdue and seeking payment and a separate written notice advising you the debt may be reported to a credit reporting body.
5. A default remains on your credit report for 5 years.
6. Paying your bills on time and avoiding getting a default on your credit report are positive impacts on your credit rating.
7. A number of late payments could be an indication you are in financial stress and may negatively impact your credit report.
8. If you are concerned about late payments, defaults or past poor history (including bankruptcies), discuss this with your broker.

If you want to get a copy of your credit report, you can create a myEquifax account to get two free Equifax credit reports each year by going to https://my.equifax.com/consumer-registration/UCSC/#/personal-info.