Your Personal Credit File is more important than ever!

Recent changes to the Privacy Act legislation will have an impact on the Personal Credit Record. In effect this new legislation gives Credit Agencies, such as Veda the ability to share additional information about your credit lines and the way in which you manage them.

Although this brings Australia into line with other OECD countries, it effectively allows banks and other lending institutions and credit providers the ability to look deeper into your credit history to help them in assessing you as a credit risk. Effectively this will turn your credit file into what they refer to as ‘Positive Credit Scoring’.

So what are the changes?

• The date the credit account was opened
• The type of credit account opened
• The date the credit account was closed
• The current limit of each open credit account
• Repayment performance history about the individual.

For those who didn’t already realise, almost every application for credit from zero interest furniture deals to home loans are recorded on your credit file. In addition any outstanding debts which you fail to pay or are late in paying can be and are often recorded on your credit file, to help businesses understand your ability and your commitment to paying your debts accordingly.

How can they potentially affect you?

In short, if you have a poor credit file, two major things can happen:
1. You can’t get access to credit (any lending)
2. You get access, but they charge you higher interest because they see you as a higher risk due to your credit conduct.

Therefore it’s more important than ever to ensure you keep a clean credit history, so it builds up to be a positive credit story. You must pay your bills on time, including paying trade bills or professional service fees, because if they or anyone offering you credit terms sends your unpaid debt off to a credit collection agency, you run the huge risk of having a late payment or default recorded against your name. This puts any future credit at risk for a good period of time, often up to 5 or 7 years. And it will at the very least be more expensive to you or they will simply decline your application on a poor (Negative) credit score.

Don’t be complacent as the likelihood in your life of needing basic credit via your power, gas, phone or water providers, not to mention your credit card or general lenders is at risk if you don’t pay your bills.

You can obtain a copy of your credit file  : Click here