What if I ask for hardship assistance from my credit provider. Will this show up on my credit report and affect my credit score?
If you're struggling with your credit card bills or loan payments you can ask your credit provider to assess you for 'hardship assistance' – this is where you and your credit provider might agree to change your repayments to give you more time to pay. Alternatively, you might agree to reduce what you need to pay. What type of assistance the credit provider can offer will depend on a few factors: your circumstances, the type of loan, and the credit provider's own processes and systems.
First, asking the credit provider to assess you for hardship assistance will not affect your credit report or credit score. So it doesn't hurt to just ask!
If you and your credit provider come to an agreement to give you hardship assistance, how this will affect the 'repayment history information' on your credit report will depend on the terms of what you agreed.
If you're unsure what you have agreed with your credit provider, you should ask them to confirm how the hardship arrangement will impact your repayment history information on your credit report. If you're not happy with the terms of the hardship arrangement offered by your credit provider, you can complain to the credit provider's external dispute resolution scheme.
Also, if you're struggling, you might want to talk to a financial counsellor. Financial counsellors work in community organisations and provide advice about credit and debt issues. Financial counselling is free, independent and confidential.
I've been late on a credit card bill or loan payment by a few days. Will this be shown on my credit report?
This will depend on several factors outlined below.
Your credit report will now show whether you make your repayments on time. This is known as 'repayment history information'. It's important to note that this only applies to loans that you get from banks, credit unions and finance companies – these are credit providers that hold an "Australian Credit Licence".
Phone, gas and electricity companies don't report repayment history information: Missed payments won't be shown on your credit report as repayment history information. However it's still not a good idea to miss these bill payments. If you do you might be charged a late fee by the company and, if you're more than 60 days overdue, the phone, gas or electricity company may report a "default" on your credit report, making it harder to get credit in the future.
Credit card, store card, personal loan and home loan payments: If you missed a payment on one of these types of products, it may be recorded as missed on your credit report – depending on how late you were. For a credit card, you need to make the 'minimum monthly payment' (not the full balance of the account) to make sure your repayment history information shows that you've paid on time. If you have an overdraft with your bank or credit union, late payments may also be recorded.
Was your payment late: Have a look at your account statement or internet banking to see when your payment was due, and when the payment you made was received by your lender (sometimes shown on your statement as the day the payment was "credited"). This is the date that counts. If the payment was received by your lender on or before the due date, then the payment will be shown on your credit reporting as being paid on time.
If you were less than 14 days late: If your payment was received within 14 days of the due date (and you weren't already overdue from the previous month), then your credit report will still show that the payment was made "on-time". This is because the law requires credit providers to give a 14-day grace period on late payments – but keep in mind, even if you're less than 14 days late, you still might be charged a late fee, or miss your opportunity to have 'interest free days' on your credit card.
If your payment was received by your lender more than 14 days after your due date, then your credit report may record that it was late.
If you're still not sure: Talk to your lender to understand what they recorded. The way different types of loans work can influence whether your payment is recorded as late (but you'll always get the 14-day grace period if you've been up to date with your payments in the month before).
Don't worry too much if you miss one payment: If you've missed a payment by more than 14 days, don't worry too much. The good thing about repayment history information is that your credit report will also show every time that you made a repayment on time over the previous 24 months. A credit provider is unlikely to worry too much if you've missed a payment over that time, if they can see that you've made your payments on time in the other months. Of course, if you are missing payments more regularly, and you apply to a new credit provider for a loan, this may make that credit provider worry that you won't be able to afford a new loan. If you're struggling with your credit card bills or loan payments talk to your credit provider - you can ask them to assess you for 'hardship assistance' to help you get back on track.
An automatic payment i.e. direct debit will help you avoid missing payments: Talk to your lender about setting up an automatic payment i.e. direct debit for your minimum payments in the future. This means that you won't simply forget to make the payment
Can I opt out of positive credit reporting? I don't want my repayment history information available for others to view.
It is not possible to opt-out of positive credit reporting. Credit reporting – like other types of 'privacy' related matters – is governed by a piece of legislation called the Privacy Act, which is overseen by the independent government agency called the Office of the Australian Information Commissioner.
The Privacy Act sets out very clear rules to protect your privacy and ensure that your personal information is protected. The protections in the Privacy Act are generally based on the idea of 'consent' – that is, the business can use your personal information for its purposes provided it gets your consent to do so
However, things are a little bit different when it comes to credit reporting. The rules applying to credit reporting aren't based on getting your 'consent'. Instead, the law imposes limitations on credit providers and credit reporting bodies that are much stricter than those applying to other forms of personal information – while also giving you very clear rights to see what's on your credit report and to get incorrect information fixed.
Importantly, the information held by the credit reporting body is not available to just anyone to view. Only a limited range of businesses can access the information – and then only for a limited range of purpose, such as when you apply for a loan with another credit provider.
Is my credit information protected by the Privacy Act?
Yes, in Australia, the law that protects your personal information is contained in a piece of legislation called the Privacy Act, which is overseen by the independent government agency called the Office of the Australian Information Commissioner.
The Privacy Act has thirteen principles – known as the Australian Privacy Principles - that set out the way businesses (other than very small business) must behave in relation to your personal information. These Principles outline how lenders must handle, use and manage personal information that they collect from you and how you manage any accounts with them.
In addition, the Privacy Act also has specific rules that apply to how a lender can access your 'credit report' – this is a record of how you've handled loans and debts with other credit providers before.
The laws that apply to credit reporting strictly limit how a lender and a credit reporting body (which is the business that holds your credit report) can deal with the information on your credit report. Importantly, the information held by the credit reporting body is not available to just anyone to view. Only a limited range of businesses can access the information – and then only for a limited range of purpose, such as when you apply for a loan with another credit provider. Plus, the laws also give you very clear rights to see what's on your credit report and to ensure it is accurate.
Is my credit information protected by the Privacy Act?
By the end of September 2018, comprehensive credit reporting (CCR) legislation requires the four major banks (ANZ, CBA, NAB and Westpac plus lenders owned by them) to share data for at least 50% of their credit accounts with the credit reporting bodies who compile credit reports, with the remaining 50% within another twelve months. Other lenders may choose to share comprehensive credit reporting information voluntarily.
Credit reports will reflect more payment history information, showing up to 24-month history on whether payments have been made on time for credit accounts, e.g. credit card, home loan, personal loan accounts.
The availability of additional credit information will improve the ability of credit providers to assess a consumer's true credit performance, ultimately enabling better lending decisions. Some credit providers have already begun sharing data, including HSBC and NAB.
Currently Australia is behind the rest of the world in having only "negative" credit history, such as defaults, reported at present.
Will all credit be checked? For example, is it just banks, or will utility and cellular companies share my data?
Credit reporting can be used by all types of 'credit providers' – this includes traditional lenders like banks, credit unions and finance companies. However, it also includes businesses that sell you things on credit, like phone and utility providers.
However, only lenders like banks, credit unions and finance companies can share information about your repayments.
What is my credit report and score? Do the banks look at both?
Your credit report and credit score are different things and it's important to understand the difference between the two.
Your credit report provides a summary of the credit that you've had and how you've treated it, including how much credit you have, and whether you are keeping up with repayments. As we move toward comprehensive credit reporting, lenders will begin to supply this information for each loan account you have, and this will be accessed by other lenders if you apply for additional credit.
A credit score is a number typically between 0-1000 (or sometimes 0-1200) that provides an indication on how likely you are to pay back the money you owe to a credit provider – the higher the score the better. The credit score is calculated by a credit reporting body based on information contained in your credit report and may be given to a lender when the lender accesses the information on your credit report. Some lenders use a credit score as an initial sorting method – saying they will only look at people with a credit score of 'X' or above
However, whether a lender lends to you will be based on more than just the credit score – the lender will look at other information that they know about you. This could include information that you put down on your application – such as your income and expenses – or how you've used any other accounts that you already have with the lender.
Knowing what your credit score is – and tracking any changes in the score – can give you a great indication of the state of your credit health. There are several websites that offer you free access to your credit score – usually on the basis that they can ask for your permission to market things to you. The score you get through these websites will give you a snap shot of how your credit report makes you look to a lender – but just remember that the health of your credit report, which goes into your score, is the most important thing when you go to borrow money or buy something on credit.
As lenders begin to supply comprehensive credit reporting into the system, you can keep your credit score strong – or even improve it – by making sure you keep up to date with your repayments on each loan account you have.
Those who have been regularly paying their debts on time need not be concerned by the move toward comprehensive credit reporting. The new system will empower consumers with good credit health and help banks and other lenders to lend responsibly, protecting the long-term financial health of lenders and borrowers alike.
Can I get better deals if I have a clean report?
Simply put, consumers who have been diligent in making their repayments on time may be able to borrow more money, and this may be at a lower interest rate than before. For example, a good payment history could mean that you have more options available to you, so that you can shop around for a loan with a better interest rate. It's now more important than ever to pay your debts on time, and if you do, this will be reflected favourably on your credit report and help you the next time you need a loan. For people with little credit history, CCR will make it easier to get a loan. Lenders can see that they have been regular with repayments on a credit card or a home loan obtained years earlier.
The new system will help lenders to identify when customers are credit stressed or over-committed before extending further credit, leading to fewer bankruptcies and bad debts, and potentially reducing the risk of over indebtedness in Australia.
Can I go to my bank and ask for them to give me my credit score?
A business known as a Credit Reporting Body holds your credit report - a summary of the credit that you've had, and how you've treated it. It also includes how much credit you have, and whether you're keeping up with repayments. The credit reporting body may use the information on your credit report to calculate a credit score. When you apply for a loan, the lender will get your credit report from the credit reporting body and may also get a credit score to help them assess your application. Under the law, the lender must destroy or de-personalise the information that they got from the credit reporting body once they don't have any use for it.
If you're interested about what's on your credit report, or what your credit score is, it's usually best to go straight to the credit reporting body – the information that they hold will be the most up to date. You can get a copy of your credit report FREE from each of the credit reporting bodies annually. Also, there are several websites that offer you free access to your credit score – usually on the basis that they can ask for your permission to market things to you.