Australia’s New Credit Laws
- Reporting now looks at your positive credit activity more than ever
- The changes introduced in March 2014 could be significant to your credit rating
- More than 60% of people don’t know about the new credit rules (source: Australian Retail Credit Association)
If you’re not up-to-date with Australia’s new credit laws, we urge you to keep reading, because a good credit profile can be the difference between an average car and the car of your dreams – and of course, the car finance that makes that dream a reality.
Some Background Information
Having a good credit rating is about diligent use of finance and knowledgeable use of credit resources, where the latter is just as important.
For example, you’re thinking about getting a new car and, because you’re a savvy bargain hunter, you’ll shop around until the right finance option presents itself. What you may not be aware of however is that making too many inquiries in a short space of time looks suspicious to lenders. They may assume you’re desperate or think there’s some risk other lenders have identified that they’ve overlooked. In these cases, lenders may err on the side of caution and decline your application.
So what’s changed?
New legislation came into effect on 10th March this year, and is seen as a shift in credit status reporting. The changes are mostly geared towards ‘positive reporting’, meaning the analysis of payments made towards credit facilities like personal loans, car loans, home loans and credit cards – great news if you pay things on time.
This is also good news for the budget conscious – i.e. those who start several applications, comparing the details and shopping around for better interest rates and more flexible finance. Traditionally, as stated above, this type of activity had negative connotations.
How do the new credit rules affect those with bad credit?
For people with a less than perfect credit rating, the change is also welcome. Assuming you’re able to service your current loans and credit card then all you need to worry about is paying on time!
If your previous loan applications were unsuccessful, the new credit laws mean you could be in for a pleasant surprise should you re-apply. However, keep in mind the new positive reporting system is still being developed in conjunction with the old system.
Finally, it’s worth noting that bad credit loan profiles are common. The new changes are also designed to account for anyone who has defaulted on previous loans, suffered from sudden loss of income, battled through bankruptcy or any number of financial burdens.
Like many Australians there’s a good chance you’ve never ordered a credit report, so to get that process started we recommend reading: How important is my credit report.