Credit reporting takes the good with the bad

We can often feel our clients tense up at the mention of 'credit rating' however, following changes to the Privacy Act last year, lenders will now start getting a more holistic view and clients with a good history should be better off.

In the past, only a customer's negative history including defaults, insolvency history and credit applications (not including whether they were approved or declined) were visible to lenders. Moving forward lenders will be able to assess applications with more detailed credit history information, including positive details of their clients' credit history.

The change will allow lenders to collect and share additional credit information including the opening date of an account, if an application was approved or declined, the type of credit and what the limit is, along with two years of month-by-month minimum repayment history. This detail will paint a more complete and accurate picture of the clients' history for the lender to base their decisions on.

If a lender chooses not to report this information they won't get the privilege of accessing the information from other lenders. As a result, most of Australia's lenders have agreed to implement this new system so that they have access to more comprehensive information and can make better informed lending decisions.

Of course this system's transparency increases the importance of having a clean credit history, however it will be a positive change for clients with a good credit rating. We can expect to see them gaining access to more options and to be offered better deals. People who have been managing financial hardship should be able to recover and improve their credit ratings faster.


As always if you, or your clients, have questions regarding how the new changes could impact home finance lending don’t hesitate to get in touch with me to find out more.