Australian law governs who can see your credit file and for what purpose. The Privacy Act of 1988 dictated what information credit reporting agencies can release to lenders. This was a ‘Negative’ Reporting system and Credit Reporting Bodies (CRB’s) could only hold adverse information. On the 12th March 2012, the Privacy Amendment (Enhancing Privacy Protection) Act 2012 came into effect that further enhanced the reporting capability of CRB’s by changing Australia’s Credit Reporting to a ‘Positive’ System allowing credit providers to exchange more information about you and your accounts. This now includes your ‘Repayment History’ for each account you have. Consumer Credit Liability Information (CCLI) and Repayment History Information (RHI) are some of the enhancements under the amended act.
When an organisation completes a credit check, it reviews the history that you have with other lenders. Apart of the application process also considers your length of employment and house hold income such as house hold income vs expenditure as a part of their individual lending criteria. A lender will also complete ‘Responsible Lending Obligations’. The process will vary from lender to lender dependent upon what risks the business will undertake and the type of credit sought.
The enhancements also changed the way in which companies and lenders can access your credit history file by creating a new classification of “Access Seeker’ where a ‘soft touch’ is made that does not impact your credit worthiness and does not leave any credit enquiries.
When you have a ‘Clean’ credit history, the information and lack of adverse information contained in this file makes it possible for a quicker and smoother application process especially if you have at any stage; been electronically verified.
Using your CCLI and RHI, as well as a lack of adverse information gives a lender a clearer and more concise picture of your credit worthiness. On the other hand, a history of slow repayments, lack of stable employment, or major events such as bankruptcy or debt agreements could cause lenders to deny your request for credit. Your file contains information about your credit history across Australia.
Anyone who requests to view your credit file must have a legitimate business purpose for doing so and MUST obtain your permission to access and obtain your report as well as exchanging credit worthiness information.
This typically includes businesses and companies that provide Consumer and Commercial Credit (being deferred payment of 7 days or more). The most common types of companies that request consumer credit reports include:
Anyone who views your file can see the ‘create date’ showing when you first became credit active. They can view Identity Segments, Individual Consumer Credit Enquiries, Individual Commercial Credit Enquiries, Commercial Credit Enquiries, Public Record Information. Ensuring that no adverse listings are placed upon your credit file and that you repay your lines of finance and credit within the terms and agreement between your credit provider and you. You can improve your credit rating by not being more than 5 days late with payments, only using the credit you need, and limiting loan applications so you don’t have excess enquiries. Any more than 5 applications in 12 months will raise flags upon application to a potential credit provider.
Increasingly more lenders will move to a ‘Risk Based Lending’ process where the lending criteria will be based upon your credit score, most notably Society One.
This means that all aspects that create your overall Credit Score will play a significant role in your being approved or declined.