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Lenders this last week have been nitpicking through the most trivial of items due to the introduction of Positive Credit Reporting. I have been asked to explain why someone spent $35 back in June this year as it showed a payment into another bank account (he was repaying a lunch), what was the $100 in July directly into a bank account (a birthday present) and explain the regular payment each month to another bank (insurance!).  While it is not the intention of positive credit reporting to look at every transaction in your accounts, anything with just a Bank in the notation may be queried as it may be a loan.
So what can you do to make sure the banks don’t have anything but positive things to see in your application?
  1. Label all transactions so you remember what they are and then the banks can see what payments are for.
  2. Close any unused credit facilities including travel credit cards, zip pay or personal loans and keep the closed account letters as proof.
  3. Make all repayments for credit on time – do not pay late as this bad habit could be used against you in a credit application.
  4. Always keep your savings accounts in the black – no overdrawing
  5. If you always run your credit card close to the actual limit you are living beyond your means. Shut the facility down and just pay it off as you can – do not use it again as it is not being used for a rainy day but everyday and can cause poor credit scoring at banks.
  6. Limit the number of credit facilities you have. Too many can hurt your credit score.
  7. Stable employment and stable living quarters – banks ask for three years of history. Try to keep to no more than two within each three-year period.
  8. Keep your drivers licence details up to date with the correct address either on the front or back.
  9. Keep an eye out for fraudulent activity on your credit file – go to www.mycreditfile.com.au
So how about sharing your BEST ideas for keeping your Positive Credit Report looking positive?   

credit 1

So what additional information will be added to my credit report?

Comprehensive Credit Reporting will introduce more data that reflects positive credit behaviour.  For example, more information will be available about your payment behaviour, making it easier for credit providers (i.e. banks and lenders) to better match the credit you applied for to your needs and circumstances.  This will mean your credit report may show the following information on accounts like credit cards, home loans and personal loans:
Credit account history:
    • Type of credit account (credit card, personal loan etc.)
    • Date the credit account was opened
    • Current credit limit
    • Account closed date
Repayment history:  your loan repayment history over a period of 2 years (24 months) including any late or defaulted repayments you may have received and the date you paid the default in full.

How might this benefit you?

As more CCR information is available to be shared by lenders, it can ultimately drive market competition and result in lenders offering a better deal based on your unique credit circumstances.  In short, you could be rewarded for a good credit score with a lower interest rate.  Your credit score may also change (in a good way) as the additional data i.e. showing that you pay your bills on time, may positively influence it.
Audit of Car Finance Providers
I also heard this week (with some satisfaction) that the Government has charged Ernest and Young to audit car finance providers, who previously seemed to be able to get loans for people a lot more often and for higher loan amounts than we could (as we declare actual positions) and it’s great to see honesty in all credit applications is making a big come back.

Quote of the Day:
“Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.”
– Will Rogers

If you would like to discuss your situation, please do not hesitate to contact me on 0412 709 200 or book a time to chat via calendly.com/louise
With thanks,