As of July 2018, positive credit reporting is mandatory for all credit providers. The objective of this is to provide all credit providers a better way to assess one’s ability to sustain debt through the provision of a potential borrowers credit history. 

Australia was previously operating via a Negative Credit Reporting practice, which was based around making a note on one’s credit report related to a negative event. Performing a credit check on an individual presented information such as overdue debts, defaults, bankruptcy or court judgements. These credit checks also noted whether that individual had a applied for some-type of credit facility; this may also include a mobile phone account, electricity bill; anything that required a credit related service. 

With Comprehensive (Positive) Credit Reporting or CCR, a prospective lender is able to make a more comprehensive and balanced assessment of an applicants’ ability to sustain debt based on their credit histories. When a credit check is performed the lender is able to see information about that individual such as what type of accounts are held, which accounts have been opened and closed, the date default notices are paid and whether existing credit facilities are being repaid on time. This information now makes up an individual credit score. An individual’s credit score is calculated out of 1,200 and the closer an individuals score to the 1,200 sits, the stronger their credit worthiness is. 

What is a typical credit score and what should you aim for:

Excellent: 833 – 1,200

Very Good: 726 - 832

Good: 622 – 725

Average: 510 – 621

Below Average: 0 – 509

Checking your credit score will not impact one’s credit score. Many service providers have access to credit scores to check one’s credit score and not leaving an imprint that a check has been made. 

Late payments on credit is defined and reportable when overdue for 14 days or more. 

Late Payments

There are 3 main types of late payments associated to credit cards and various loan types:

1. Late Payment – This is when a credit facility is 14 days or more overdue

2. Default – Where there is an overdue payment of $150 or more and overdue for 60 days or more. Defaults are recorded on your credit profile and will be visible and affect your score for 5 years. 

3. Serious credit Infringements – Payment of $150 or more overdue for 60 days or more. Lender has written to the individual to the last known address, no contact has been made by the individual to address outstanding amounts. Lender then waits for 6 months after listing the default to which it then records the infringement onto your credit profile, which then is visible for up to 7 years. 

Making one late payment on its own is note enough to ruin your credit worthiness. But a number of late payments on your credit report is a sign of significant financial stress. 

What sort of service providers would list a late payment? 

Any debt which is for $150 or more and overdue for 60 days or more can be listed. This debt may relate to phone bills, water, electricity, internet and the like. 

The above is somewhat of an insight of what lenders must consider as part of their assessment into your ability to borrow. The landscape is ever so changing and what is considered today with a heavy hand, tomorrow this may not be the case as technology provides more information a credit provider seeks to ensure your ability to sustain debt.