The introduction of the new Privacy Regulations 2013 on 12 March 2014, as part of the Privacy Amendment (Enhancing Privacy Protection) Act, includes significant implications for individuals regarding how their credit data is captured, stored, and shared.
In particular, the new “Comprehensive Credit Reporting” or CCR, as it is termed under the amended regulations, changes the type of credit information captured on an individual, as well as the way in which it can be accessed by lenders seeking to assess whether or not to provide credit.
While the former credit reporting regime only permitted the collection of what was known as “negative data”, such as whether someone has been denied credit for products like a home loan or credit card, the new regime will change the reporting to a “positive data” stream, meaning the assessment will be made based on whether or not individuals have serviced their credit on time.
Individuals need to be aware that under the reforms, new kinds of credit-related personal information, known as the “Repayment History Information”, can be collected and stored on their personal record. This includes information such as whether a payment has been made on time or after the due date and also whether or not a “late” payment was received. While the actual amount of the missed payment is not recorded, the tightened regime also considers “part payments” overdue.
It is also worth noting that while the new details of a person’s repayment history is only accessible from 12 March 2014, the system is back-dated to December 2012 to include missed payments made from that time.
This information is available to licenced credit providers, such as financial institutions, VEDA, Dunn and Bradstreet and Experian and these ‘black marks’ against a person’s credit history can remain on their file for five to seven years depending on the type of debt. And, it is not removed just because it has been paid. It is now more important than ever, that individuals ensure that they meet their commitments by the due date to prevent any problems with obtaining credit in the future.
This new regime brings Australia’s credit reporting regulations in line with the vast majority of the countries associated with the Organisation for Economic Co-operation and Development.
Concerns aside, there are benefits to the new CCR scheme. Under the new system Australians will now have more power to improve their credit worthiness as it allows them to more effectively demonstrate good credit behaviour, improve their credit profile faster and build their credit worthiness more quickly.
Still, to keep a “clean” credit report it is worth ensuring that individuals take the following steps:
- Keep track of their current commitments;
- Pay their commitments on time; and
- Keep a copy of their credit report to ensure it is correct at all times.
Further to the above, there are certain circumstances under which individuals can obtain a copy of their credit report for free from credit reporting bodies:
- Once every 12 months from the date a credit report is obtained;
- If you have been declined on a credit application and you have requested a copy of the report within ninety (90) days; and
- If you have requested an amendment to your credit information.
Disclaimer: Should you have any questions or would like Shaw Gidley to provide further information, do not hesitate to contact our office on (02) 4908 4444. This article is intended as a source of information only. No reader should act on any matter without first obtaining professional advice.
Joshua Robb is a Manager at Shaw Gidley and has extensive experience in all aspects of both corporate and personal insolvency administrations. He holds a Bachelor of Commerce with joint studies in management and financial accounting and a Diploma of Advanced Insolvency Law. Joshua is a member of the Insolvency Practitioners Association of Australia and The Institute of Chartered Accountants.