Dun & Bradstreet welcomes comprehensive credit reporting system

12 March 2014

Financial inclusion in Australia is set to improve following today's implementation of changes to the Privacy Act, which will introduce a comprehensive, or 'positive', credit reporting system for Australia's estimated 16 million credit users.

The new reporting system - which increases the amount of information available to credit providers, such as banks, utilities and telecommunications companies, when assessing consumer applications - commences today after being passed by parliament in November 2012.

Until now, consumer credit reports in Australia have included identity details, credit enquiries information and negative data such as defaults, court judgments and bankruptcies. However from today, credit reports can contain additional information about an individual's credit account types, status, limits, and up to 24 months of repayment history information.

Australia's oldest credit reporting body, Dun & Bradstreet (D&B), which holds records of individuals' credit reports, expects that the additional information will improve financial inclusion for those people otherwise locked out of the formal credit system by presenting a fuller and more balanced view of their financial position and history.

The information will also provide the data for more accurate decision making by credit providers, leading to fairer and more responsible lending, and greater overall levels of activity in the financial system.

"Having advocated for these changes since 2004, D&B welcomes the formal commencement of a positive credit reporting system to Australia, and the broad economic benefits that it will create," said Gareth Jones, CEO of Dun & Bradstreet.

"Until today, Australia was one of the few remaining developed economies in the world to be operating in a negative credit environment; an environment which limited the ability of consumers to demonstrate their creditworthiness, and credit providers to make better lending decisions.

"With positive information now available, consumers will be empowered with a clearer picture of their ability to borrow, manage and repay credit. This has been a particular and previous issue for those currently underserved sections of the community, including recent immigrants and individuals with a limited credit history, such as young people," Mr Jones added.

Since 2004, D&B has been a leading advocate of comprehensive reporting and it supports the government's move to introduce a positive system that will provide substantial benefits to Australian consumers and credit providers.

In the lead-up to the reform of Australia's credit reporting system, D&B and the Policy & Economic Research Council (PERC), one of the world's foremost experts on credit information and economic development, conducted a study into the impact of a positive reporting system.

The study, which utilised 1.8 million de-identified credit records, was the first of its kind in Australia and revealed that comprehensive reporting would:

  • make lending fairer and significantly improve credit distribution and access in Australia
  • create growth in lending to the private sector
  • improve access to credit for small businesses 
  • help lenders mitigate risk.

While the credit reporting changes are likely to affect the millions of people who have ever used credit - and the millions more who will in the future - D&B has reported that as few as one-in-ten people are aware of the change in legislation.

"Given that credit is so widely used in our everyday lives - whether for a mobile phone contract, buying groceries with a credit card, or taking out a bank loan - people should understand that the amount of information about how they manage that credit has increased," said Steve Brown, Director of Consumer Credit at Dun & Bradstreet.

"The inclusion of repayment history information on credit reports can now help those people with a previous default listing take steps to show lenders they are addressing that slip-up by making regular and on-time payments.

"Equally, however, under the new system a history of late payments will be more obvious to banks, which means it's more important than ever for individuals to keep an eye on their credit report and make sure they pay their bills when due," Mr Brown added.

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