THE CHANGING LANDSCAPE OF THE AUSTRALIAN CREDIT REPORTING SYSTEM

Credit reporting in Australia is Governed by the Privacy Act 1988(Com) as Amended, and is supplemented by the Credit Reporting Code Of Conduct which took effect on 27 March 1995.

Our current Credit Reporting System is plagued with problems and is less than perfect. The Australian Law Reform Commission (ALRC) in August 2008 made a total of 295 recommendations to be adopted in our Credit Reporting System. One suggestion being a comprehensive credit reporting system was finally adopted by the government in October this year.

The adaptation of a comprehensive credit reporting system shall take effect early in 2010. There are (5) substantive changes which affect credit reporting in Australia.

• Identifying if an application for credit is accepted or declined, together with identifying the type of loan applied for.
• Identifying the amount of an account limit.
• Identifying the date the account commenced.
• Identifying the date the account closed.
• Identifying a payment performance history. (Subject to, and conditional upon strict compliance with responsible lending provisions.) (RLP)

Change was necessary and long overdue. In early 2003, the Consumers Federation of Australia highlighted significant failures in the pre comprehensive system.
Of particular interest and worth noting are the following identified failures.

• Reports are inaccurate.
• There is no effective way to remedy existing inaccuracies
• Access to the credit reporting system is not sufficiently controlled.
• There is a lack of regulatory oversight
• There is a distinct non compliance with the Information Privacy Principals

The issues identified by the Consumers Federation of Australia as being problematic are inherit in the pre comprehensive system, and as such will infect the expanded system. The challenge faced by regulators and the custodians of our system are wide and varied. Of primary concern should be an evolved system which circumvents previous failures.

Until fundamental and systematic change occurs credit reporting in Australia continues to short change the consumer. Such change is broader than the newly adopted system, it must embrace an understanding that consumer rights cannot be subrogated to those of credit providers or credit reporters.

Comprehensive credit reporting allows lenders and trade creditors to consider a larger volume of information when determining an application for credit. Albeit, this concept is valid and should be encouraged as it protects the integrity of the lending system. However at what cost?

THE HAZARD OF CREDIT FILE FOOT PRINTS

A foot print if defined as activity recorded on a credit file. The content of such activity is wide and varied containing such thing as;

• Defaults
• Judgemnets
• Credit enquiries
• Cross references
• Previous directorships
• External administration
• Bankruptcy & Part 9 Debt Agreements
• Court writs & Summons

The main focus of this article is to concentrate on Credit Enquiries & the impact on a credit file from the perspective of a credit provider looking at the credit file in determining whether or not to advance credit.

Most foot prints are placed on a credit file unilaterally by a credit provider in response to a failure by a consumer or organization in honoring the terms of a credit agreement, typically; failure to pay or late payment. Other foot prints are placed on a credit file by the consumer simply making an application for credit, irrespective of whether or not they take the loan.

The implications of excess credit enquiry on ones file is that it affects one's ability to be approved and ultimately obtaining credit. Some lenders score excessive credit enquiry harshly & view them with the same distain as a defauly or judgement. Accordingly credit enquiries where possible should be keep to a minimum.

Internet applications for credit or using the internet to search for various credit options are the single most contributing factor for excessive credit enquiries appearing on credit files. In most cases it is not apparent from the website that an enquiry is being logged and recorded. The nasty suprise normally rears its ugly head sometime in the future once the shopping around is complete and a true request for finance is made. By then it's too late the damage is done.

It is important to protect yourself from falling victim to excessive credit enquiries. May we suggest the following:

• Read the terms and conditions of a website to see if it's their policy, to make an online enquiry on all enquiries & applications.
• Make it abundantly clear to the broker or institutional representative that you are shopping around and you do not wish for an enquiry to be listed against your credit file.
• Ask the finance broker or institutional representative to assess your application prima facie (on the face of it or at first glance) before lodging an application for finance or even making an enquiry.

The above tips serve only as suggestions and should not be relied on solely. Should you have a query about credit enquiries, contact Joseph Trimarchi on
(02) 98904811 for a discussion specifically about your circumstances and a solution with regards to same.

Remember Credit enquiries stay on your credit file for a period of five (5) years.

Your credit file is an important instrument which gives an insight of your credit worthiness to credit providers. Therefore, all steps should be taken to preserve its integrity and portray you in the best possible light to prospective credit providers.

IDENTITY THEFT AND IT'S IMPACT ON CREDIT FILES

Identity theft by definition is the fraudulent practice of using another person's name and personal information in order to obtain a loan or credit.

The reported and indeed unreported incidents of identity theft are on the increase. Despite concerted efforts of individuals and corporations, the rogues perpetrating this crime are increasingly sophisticated in their method of operation. The net effect of such crime is the carnage inflicted on individuals both emotionally and financially.

The purpose of this article is to shed some light on the following:

 

• The impact on your credit file
• What do you do if you become a victim?
• How to protect against becoming a victim of identity theft.

The impact on your credit file!

A default, judgement, enquiry, bankruptcy, previous directorship or cross reference may be listed on your credit file, and remain for (5) up to (10) years. The sins committed by the rogue party are inherited by you. Remember, credit providers and credit reporting agencies are not privy to the fraudulent activity. They assume it's your activity. Such fraud goes undetected until such time as you apply for a loan or credit and a credit report is obtained by a lender on your behalf. Invariably your application will be declined.

What to do if you become a victim!

• Immediately obtain a copy of your credit report & identify the listed activity which is fraudulent.
• Report the incident to police and make a statement. Obtain a copy of the police statement and get an EVENTS number from them.
• Forward all this information to the credit provider and to the credit reporting agency.
• If the task is daunting or you do not have the time, Joseph Trimarchi & Associates Solicitors are able to assist by handling the whole process for you.

How to protect against becoming a victim of identity theft!

• Protect your identity
• Subscribe to an alert service which informs you to activity occurring on your credit file. The main credit reporting agency Veda Advantage offers such subscription.
• Upon detecting a problem, act swiftly, as time is of the essence.

I trust the above information is of assistance. Please note it only serves as a guide, if identify theft has affected you, give me a call for a no obligation confidential chat to see if our team can help.

Joseph Trimarchi

Solicitor