When you apply for credit – including opening a new mobile phone or gas/electricity account – the service provider is likely to take a look at your credit history. This shows applications you’ve made for credit and negative information like unpaid bills, overdue accounts and loan defaults. These details can stay on your credit history for years, potentially making it difficult to secure a competitively priced loan. Yet people often don’t know they have a tarnished credit record until they’re knocked back for a loan.
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This system is set to change from July 1 when “comprehensive” credit reporting (CCR) is due to kick in. The proposed legislation calls for our big financial institutions to provide details of positive, negative events, and up to 24 months of debt repayment history can be recorded on your personal credit file.
Positive credit reporting has been in place overseas for some time, and anecdotally, borrowers often use a strong credit rating to negotiate a lower interest rate.
The big banks have already begun compiling details of your repayment history in readiness for the new system to come into effect.
In our busy lives it can be easy to overlook bill payment dates. Setting up an automatic direct debit or automatic payment system can help.
If you regularly struggle to meet bills for utilities like power and gas, ask your energy provider about “bill smoothing”. This is where you work out your total power bill for the last year, divide it by 12 and then pay a monthly sum into your energy account. This can be more manageable than paying a large quarterly bill.
