Mortgage brokers from Rockingham, Kwinana and other Perth suburbs have been working with the new credit reporting procedures for close to a year now. On 12 March 2014, the “comprehensive credit reporting system” went into effect across Australia. The changes were in response to changes in the Privacy Act.
Unfortunately for many, in this case, “privacy” means that credit reporting agencies are now allowed to share even more information than they used to. Most of the “enhanced” ability to share is the sharing of negative events, lowering many credit scores.
The end result: it is now more important than it ever was to know your credit score and work to keep your credit in good standing. Let’s take a look at some of those changes.
Default Threshold Raised
Before 12 March 2014, a “default” would go into your credit report if you were late by 60 days or more and on any amount owed that was more than $100. The “default” would stay on your report for five years. Now, the dollar amount has been raised to $150 with the rest of the variables the same.
Repayment history was not listed before 12 March 2014. Currently, if you are late by five days, it is now listed on your credit file and it stays for two years.
Previously, opening dates, closing dates and account limits were not listed. Now, they are.
What This Means to You
Depending on your financial situation, these changes can either help you or hurt you. Some people may be helped by one aspect and hurt by another. The overall effect is that lenders have more information with which to make decisions, but that some of it is negative. Lenders want to know they are going to get all of their money. They assess risk based upon your behaviour.
It is wise to talk to a professional mortgage broker about your individual situation. Call Smartline Rockingham today: (08) 9527 1800.