What the new credit reporting laws mean to you
New credit reporting laws will require banks to pass more detailed information on customers’ credit histories to credit bureaus.
Under the new Comprehensive Credit Reporting laws, banks must provide details such as the date of opening and closing of an account, types of credit used, credit limits, Financial difficulty information and up to 24 months of refund history. Previously, banks only had to report “defaults and serious breaches”.
What does this mean for borrowers?
The Australian Banking Association welcomes the new laws, with Chief Executive Officer Anna Bligh saying they will give customers more choice and more opportunities.
“This is also good news for customers in financial difficulty. Now, more context will help ensure that customers’ credit histories are more accurate and reliable, ”she said.
The pros and cons
Mozo banking expert Peter Marshall weighed in on the new laws and suggested that overall they are an improvement. But there are a few drawbacks to consider.
“People who are good with their finances may find it easier to get credit and maybe better rates,” he said.
“For those in financial difficulty, they may find that there are more products that penalize them with lower rates, and these are the people who can least afford to pay more for financial services.”
Marshall said that a benefit for people who are struggling financially is that they may be able to improve their credit scores faster. This is because things like paying bills on time are taken into consideration with the new laws.
Why is my credit score important?
When it comes to finances, your credit rating (or the rating) is important because it tells potential lenders how reliable you are. If your credit score is low, you may not be approved for a credit card, personal loan, or loan. mortgage. Or you can get approved with a much higher interest rate than if your credit score was a little healthier.
Want to get rid of your debt and improve your score? Read our article 7 Ways To Reduce Credit Card Debt In 2021 for some useful tips.