Prior to March 2014, Australia had a negative only credit reporting system – this meant consumer credit reports could only contain information such as credit enquiries, payment defaults and serious credit infringements. This was amended in 2014 to introduce comprehensive credit reporting (CCR).
Under the new comprehensive credit reporting system, positive data can also be included in credit reports, such as:
- The date the account was opened
- The type of credit
- The date the account was closed
- Available credit limit
- Monthly Repayment History Information (RHI) for the last 24 months
The big four banks now all share their customers’ full credit history with each other, which is a landmark regime change that promises to overhaul lending practices across the nation.
Why is an individual’s repayment history important?
Repayment history can be a key indicator of an individual’s risk; it makes it easier for individuals to show they have recovered and stabilised after a negative credit event such as a default. It also gives a more complete view of an individual’s creditworthiness, and can be leveraged by both the individual and by brokers to get a better deal when applying for a loan.
Defaults and late payments can have a negative impact on your credit report and credit score.
This shows – on a month by month basis – whether you’ve made your loan payments on time. Other credit providers will see a 24-month history of your payments (after 24 months, the information falls off your credit report).
If you’ve been up to date with your repayments and then miss one, a credit provider will only report that you missed the payment if you’re at least 14 days late. This means that if you forget to make the payment but catch up within a couple of days, your credit report will show that you’ve made the payment on time.
If you make your existing payments on time, when you apply for a new loan, the new credit provider will see that and it will help show that you’re likely to repay the new loan.
You don’t need to worry too much if you miss the occasional payment as it’s unlikely to have much impact when you apply for a new loan (particularly if the new credit provider can see you’ve otherwise making your payments on time).
If you’ve fallen behind by a few payments, or you miss payments on a number of loans, this may make the new credit provider worried that you won’t able to repay the new loan. But this can be improved by making sure you get back on track with your payments. Each month that you are able to make your payments on time will give a new credit provider more confidence that you’re going to be able to repay the new loan.
Your repayment history information is a very important part of your credit report.
Only banks and some other types of credit providers are able to report or access repayment history information. Phone, gas and electricity providers are not able to report or access this information. This means that your credit report will not show whether or not you’ve paid your phone, gas or electricity bill on a month-by-month basis (but those businesses can report if you don’t pay for at least 60 days)
What will repayment history information look like?
Whether you’ve made your payments on time is represented by a number. A ‘0’ means that you made the payment on time (or, up to 14 days after it was due). A ‘1’ means that in that month you were one payment behind. A ‘2’ means that you were two payments behind and so on.
You’ll see a history of up to 24 months (depending on how long your account has been opened and when the credit provider started to report your payments).
If your credit report shows 24 ‘0s’ in a row, this means that you haven’t missed a payment over the last two years.
In addition to a good repayment history, Credit providers are also looking for the following key indicators on your credit report to show that you are a good prospective customer:
- Stability – for example, credit providers want to make sure that you haven’t moved house too many times over a short period
- Not too much credit – this includes credit that you’ve actually taken out, but also credit that you’ve simply applied for
- No nasty stuff – this includes defaults, bankruptcy information and court judgments. These types of things will make it harder for you to get credit (at least until they fall off your credit report in 5 – 7 years).
You can access your credit report for free here. You will need your Driver Licence and Medicare numbers.
Cairns Mortgage Broker – Jason Thomson is a Mortgage Adviser and Finance Broker based in Cairns with clients all around Australia. Client reviews featured on his website prove that Jason is a trusted industry professional, facilitating great outcomes for his clients. Using his wealth of experience in financial services, he thrives on delivering superior service. Jason is very approachable and is always looking for new clients to help in the often confusing world of finance and property. Offering a no fee service, you’ve got nothing to lose by having an obligation free chat with Jason today.