A new initiative launched today by the Australian Retail Credit Association (ARCA) aims to demystify consumer credit history.
Organisations routinely seek a credit check on applications for new credit cards, loans, mortgages and mobile phone plans – yet ARCA research shows the majority of consumers (59 per cent) have not heard of credit reporting.
Ahead of the overhaul of Australia’s credit reporting system in March, which will see the adoption of more comprehensive credit history reports, ARCA has launched its new website resource. The site will provide a range of tools and tips to help educate consumers about the basics of credit reports and how they can proactively manage their credit history.
In March 2014 the reforms to Australia’s Privacy Act will come into force, and will see extensive changes in the credit reporting system.
The reforms include the introduction of the Credit Reporting Privacy Code, which was drafted by ARCA at the invitation of the Privacy Commissioner, Timothy Pilgrim.
The reforms will:
- Provide a clearer picture of a consumer’s ability to repay debts, which may enable providers to make more accurate and better informed lending decisions;
- Enable better matching of consumer credit needs, which may reduce the risk that consumers commit to repay more credit than they can afford;
- Give fairer access to credit and increased consumer protection;
- The launch of CreditSmart.org.au is the first step in ARCA’s consumer education campaign, aimed at helping all Australians take more control over their credit reports by providing unbiased and fair information.
ARCA CEO Damian Paull said the changes will affect what is in their credit report and what information can be accessed by credit providers.
Notably, whilst credit reports have historically only featured negative information about an individual’s credit history, such as defaults, this will start to change from March 2014. Some credit providers who will opt to participate in comprehensive credit reporting will also be able to share and access additional information such as repayment history behaviour.
ARCA has spearheaded the changes in order to empower Australian consumers to take control of their credit report, and assist them to better manage their financial position, Paull said.
