The term ‘bad credit rating’ strikes fear into the heart of any borrower. A poor credit history can lead to you paying higher rates for a loan, or may even mean you are unable to get a loan at all until your history ‘expires’ (which may take up to seven years).
Until now, however, the only information lenders could access from Australia’s three Credit Reporting Bureaus (CRBs) were applications for credit, defaults and bankruptcies.
However, changes to Comprehensive Credit Reporting mean that Australia’s Big Four banks are now mandated to share all their customers’ credit and debt details with the CRBs.
NAB, Westpac, Commonwealth Bank and ANZ have already started sharing their customer credit information, and will complete this sharing of data by September this year.
This means if you bank with one of the Big Four, other lenders will be able to see all your:
- loan balances (car finance, store loans, mortgages and personal loans)
- credit card limits
- missed repayments (last two years)
- late repayments (last two years)
- credit limit breaches (last two years)
- applications for credit
- credit defaults
Don’t think you are home free if you bank with a second-tier lender. Many non-Big Four banks are also voluntarily sharing various types of data with CRBs, including Citibank, HSBC and Bankwest.
As a result, your credit history has never been more important, as access to loans in the future will be impacted by all the above information.
Many Australians actually have credit facilities they didn’t know they had, or had forgotten about. This is particularly common with interest-free loans taken out at retail shops, or credit cards taken out for the purpose of getting frequent flyer points and other deals. Sometimes the debts are paid down to $0, but have not been closed.
You may be able to access your credit report for free here. You will need your Driver Licence and Medicare numbers.
If you are worried about your credit rating, contact your Smartline Adviser as soon as possible. They can advise you on the best steps to take to remedy the problem, and which lenders may be more willing to lend to you, depending on your individual circumstances.
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.