Good credit behaviours may mean more cash in your wallet.
Good credit behaviours may mean more cash in your wallet.

Bright new day for responsible spenders

A BRIGHTER credit future is on the horizon for diligent Australians, with positive data to be shared mandatorily on credit reports as of July 1.

Previously, limited customer data shared by lenders was mostly focused on negative aspects, such as high credit card limits, which may have hindered credit applications.

But comprehensive credit reporting - which has existed voluntarily since 2014 - will mean banks must share 50 per cent of a customer's data with credit bureaus, rising to 100 per cent in July 2019.

Lender SocietyOne's chief marketing officer Maria Loyez said this means the sharing of positive behaviours like paying bills on time or reducing card limits may improve someone's credit report and help them access better deals.

"A lot of people will see their credit scores improve," she said.

"And people just starting to build a credit history will be able to do so more quickly."

Newlyweds Laura and Sean Metcalfe have purchased a house but are soon to be relocated to Italy for work.

The Metcalfes are currently maximising positive repayment behaviours, knowing they will need to pay rent overseas while maintaining mortgage repayments in Australia.

Australian Retail Credit Association's chairman Mike Laing said it is a perfect time to better understand credit reporting.

CreditSmart research found 88 per cent of Australian consumers know banks checked credit reports when assessing loan or credit applications, but a quarter didn't know what they checked it for.

Some mistakenly thought a high income or savings balance equalled a positive report.

"You could have a lot of savings … but a bad credit report," Mr Laing said.

"Because you were careless about paying financial accounts on time."

 

Credit reports are made up of personal details, plus information about any credit accounts, credit cards, personal loans, mortgages or car loans you have and your repayment history on them. They also note any credit applications, default information, overdue payments, or other serious credit infringements.

Reports are usually checked when you apply for credit; for a store card when buying something on finance; for a car loan; a mobile phone plan; or a gas or electricity account.

A credit report should ideally be checked annually and can be obtained for free from a credit bureau such as Equifax (formerly Veda), Dun and Bradstreet or Experian.

Credit Card Compare's co-founder David Boyd said once obtained it can be improved.

"Check out problem areas such as outstanding bills … then act immediately by lowering your credit card limits, consolidating multiple personal loans and or credit cards," he said.

An improved credit report may see consumers rewarded with a better deal, especially with competition between lenders.

Ms Loyez said, "With positive and negative data, it will be easier to tailor an interest rate to an individual and with increased competition, banks will need to come to the party."



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