credit history reportingPrivacy of information is very important for all of us and there has been a major reform recently. Mostly its all good news for individuals as many rules have become tighter, however it also coincides with some other credit report changes that you need to know about.

As of March 14, 2014, credit reporting services like Dun and Bradstreet and Veda Advantage  will also be allowed to collect ‘positive’ credit information, instead of just ‘negative’. In the past, your credit report only reflected where you were in default of a credit account (like home loan, credit card, car loan etc) along with general information like how many credit enquiries were made on your account regularly, where you applied for credit over the last 5 years, past know addresses and company directorships etc. This was open to the occasional wrong entry, bad payment listing (e.g with a Telco or utility after moving house) and sometimes outright identity fraud from other individuals posing as you.

Banks always do a credit report check before offering credit and whilst banks have different policies, most gave some slight leeway to very small and paid defaults, if you file had no other listings, you effectively passed the test.

From March 14, ‘positive credit reporting’ data will be made available from selected information suppliers that will track whether your payments to the credit card company, utilities providers, council etc was made on time, a little late or very late and tracked for each payment. This means that if you had a period for 2 or 3 months where money was tight and you got behind on say rates, mortgage and 2 credit cards, that this might flag a banks credit scoring to deny your loan.

From my experience, only a few people are diligent about paying their bill on or ahead of time. Many people need the second reminder to spur them into action and in some cases, only a phone call as a final warning is enough to prioritise payment.

Likewise accounts can be disputed, lost when you move and the address hasn’t changed etc, but its now your responsibility to make sure you do not fall outside the payment due dates, as these records are kept on your file for 5 to 7 years and could compromise your home loan chances down the track.

Some lenders may even choose to offer different rates down the track to account for the risk profile. An applicant with a high positive credit report score may get  the maximum discount, whereas a compromised profile may have to pay a higher interest rate and over 30 years this can really add up.

The additional credit report data is being collected from the time that your credit provider recently posted out a notice telling you about privacy changes. Not all lenders and utilities etc will be providing data immediately as it will take some time to integrate and link the massive amount of data to individual files. Lenders are not compelled to provide the data going forward, but many will and over the next 6 months or so, many people will start to see changes on their credit file, and it will stay there for 5 to 7 years.

If you suffer insomnia and want to find out more specifically about all of the Privacy Reforms go to this link for more information.

You  can always request a copy of your credit file for $79.95 and in my experience, the Veda file is the most accurate. There is also an obscure link to get your file for free, although it typically takes 7 – 10 days to arrive. The link for your free credit file is here.

Bottom line – pay your bills on time, tightly manage address changes etc when moving and if a credit card is cancelled, make sure automatic debits are all changed promptly.

By Bradley Field