Consumer credit repayment vigilance urged after Federal Government sets 2017 deadline for greater data sharing
- 2-year history of credit repayments may soon be shared with lenders assessing mortgage, credit card and loan applications
Wednesday 12 July 2017 – Australian credit bureau, Experian, is urging borrowers to keep a closer eye on their credit score and making credit repayments on time after the federal government set a new deadline for more detailed data sharing amongst lenders, which includes a borrower’s repayment history.
Along with a number of measures announced during this year’s Federal budget, Treasurer, The Hon Scott Morrison, announced that the Government will “legislate a mandatory comprehensive credit reporting regime if credit providers are not reporting at least 40 per cent of their data by the end of 2017,” as recommended by a Productivity Commission report.
The move to fast-track industry collaboration under the comprehensive credit reporting regime is expected to help borrowers with a strong track-record of making timely credit repayments be better recognised and will assist others to avoid entering into unmanageable levels of debt.
The government’s deadline is a significant incentive for change from the ‘negative’ system, where lenders are generally only sharing data about credit applications and defaults, and can’t see, for example, how consumers are meeting their monthly credit repayments.
Although the positive data isn’t yet being generally shared amongst credit providers, it is being shared by a number of credit providers with Australia’s credit bureaus, which is why all Australians need to be aware of what information will be shared and how it may impact their credit scores and future applications for credit.
A nationwide survey of more than 1,000 Australians commissioned by Experian in March 2017 found 66 per cent of respondents were unaware of the Comprehensive Credit Reporting regime and how it may impact their future credit applications, while 86 per cent incorrectly believe that paying their phone and utility bills on time improved their credit score.
Despite the lack of awareness, 70 per cent said they were supportive of sharing more data with credit providers, with 39 per cent supportive on condition their data is kept safe, 30 per cent wanting to negotiate lower interest rates based on their strong financial history and 29 per cent wanting responsible borrowers to be more easily recognised and approved for credit.
Experian Australia/NZ Managing Director, Suzanne Steele, said: “The Government’s decision to fasttrack the introduction of comprehensive credit reporting in support of the Productivity Commission, will ensure Australian borrowers see the benefits of their positive data being shared much sooner.”
“The changes will help credit providers better identify and evaluate who to provide credit to, based on a broader range of data. Positive data gives credit providers a much more comprehensive view of their customer’s financial situation, creating an environment to support their responsible lending decision around the level of debt the borrower could manage. This can help reduce the number of people who may default on a loan, increase competition among credit providers and potentially drive down many costs for all credit customers.”
“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.”
“Although as many as 80% of borrowers across Australia are likely to have been making their repayments on time, this new insight for lenders is why borrowers need to remain vigilant over their repayments, so they can continue to positively impact their credit scores in the future."
“From our experience in the 18 other countries where we operate a credit bureau, positive data sharing is a much fairer system. For example, positive data may help potential first home buyers who don’t have a long credit history, to be approved for finance, where previously they may have been declined.”
“Positive data sharing may also enable Australians with a stronger credit history to access more competitive deals and interest rates and will assist others to avoid entering into unmanageable levels of debt.”
Steele said Australians should check their credit report regularly and they can do this at any time free of charge by contacting Experian or by creating a free credit profile with Experian partners like creditsavvy.com.au which help consumers monitor their Experian credit score.
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