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Positive Credit Reporting is now compulsory with lenders having to share ‘positive’ data about a borrower's repayment history with credit history providers. Previously, the only payment information that credit history contained was negative information, such as payments that were made over 60 days late and personal insolvency information. Under the new system, considerably more data is available, including all on time payments and any payment made more than 14 days late. The payment history will be included in calculating a credit score.
The intended consequence of the new system is that those who pay on time will have a good credit score and be able to negotiate lower interest rates. The flip side of this is that people who do not pay on time, and have a low credit score, will be paying higher interest rates. Under the previous system, only payments mde later than 60 days were reported, therefore a large percentage of the population were shielded from having a negative credit history and the associated higher interest rates. This is good news for those who make all payments on time, and terrible news for people who have ever been two weeks late with a debt.
From now on, people without a good credit score, ie. those who make payments late regularly, will have have to pay higher interest rates. These higher interest rates will reduce the range of debt solutions available to them. Mortgage refinancing, debt consolidation loans, and balance transfers will all have higher interest rates, reducing the benefit of pursuing these solutions. For many people this will mean an inability to service the new loan. We think it is likely that many more people will have to enter into insolvency options to resolve their debt.
Beyond Debt is a trading name of DCS Group Aust Pty Ltd. Australian Credit License: 382607. RDAA Number: 1126. PO Box 3074 Newstead, QLD, 4006.
DCS Group operates under a Limited Liability scheme approved under Professional Standards Legislation
