Australia’s positive credit reporting system is set to make an impact to borrowers over 2015 as lenders can record and share detailed information about individuals’ credit history.
Smartline personal mortgage advisers have said changes to the Privacy Act have allowed more data to be recorded and will be used to assess credit applications.
Previously, only negative information about a customer’s credit history could be reported and the change will allow for a ‘positive’ system, giving credit providers more “comprehensive information that should assist them to make better lending decisions,” Smartline says.
“Most of Australia's lenders have agreed to provide [borrowers’] data to the credit reporting agencies. If a lender does not report this information they do not get to see the information from the other lenders, so we would expect that it’s just a matter of time before every licensed credit provider shares this information,” Smartline’s executive director Joe Sirianni
Whereas before the Privacy Act change, lenders could only see a customer’s defaults, insolvency history and certain details of credit applications, over time they will be able to know if the application was approved, how much credit was used, the closing date of a credit account and two years of month-by-month minimum repayment history.
“It’s likely that we will start to see situations where clients with good credit ratings will be offered a better deal,” Sirianni said. “People will be able to recover faster from financial adversity and it will be quicker to establish a credit report.
“As a result, keeping your credit rating clean has never been more important.”