Understanding Bad Credit with Australia’s new Comprehensive Credit Reporting
Australia’s new comprehensive credit reporting system came into effect from March 12 this year and has changed the manner in which some lenders look at risks when accepting new clients.
Australia previously followed a kind of negative reporting system. In the old system, consumer credit reports could only hold information like credit inquiries, defaults on credit payment and serious incidents related to credit infringements. In contrast, the new comprehensive credit reporting system allows positive data to be entered in the credit reports as well.
Benefits of the new comprehensive credit reporting system for consumers
The new comprehensive credit reporting system grants Australians greater power to show credit worthiness and also to manage the credit profile.
- Showcase good creditworthiness: A consumer can demonstrate excellent credit behavior as the new system records whether he or she has made timely credit payments.
- Quicker bounce-back from adversity: It is possible to improve your credit profile swiftly after an adverse incident. This could help counter the negative fallout of a default with a limit of five years.
- Swifter credit reports: If an individual is a newbie in consumer credit, the usage of exhaustive information means that it is possible to build credit-worthiness much faster.
- A more transparent and balanced system: The new system will favor those who already have an excellent credit history. A more transparent process will also benefit individuals who have undergone hard times and have had trouble satisfying their financial commitments. They may be able to access quality credit previously denied to them.
How to avoid a bad credit rating
An individual can lose a good credit report rating if he or she indulges in the following activities:
- Defaulting on loans and bills due: Defaulting on loans and credit bills will still have severe credit rating repercussions.
- Taking loans without financial planning: It is highly recommended that you set yourself a repayment budget to ensure you are able to confidently repay back borrowed money.
- Could not meet the repayment schedule: In such cases, it is better to discuss the situation with the credit provider. They can assist in this regard.
If you do find yourself with a bad credit rating, Australian Lending Centre is here to help. With our wide range of bad credit loans, we can help you gain the finance you need and can help you rebuild your credit score.