Good credit history? New laws could help you save
The Turnbull government has announced ‘game changing’ new laws that will allow Australian’s to negotiate a better deal on their home loans, credit cards and other lending.
Treasurer Scott Morrison announced comprehensive credit reporting will come into effect from 1 July 2018, allowing customers to reap the benefits if they hold positive credit histories.
“This will be a game-changer for both consumers and lenders, and will lead to greater competition in lending and naturally provide better access to finance for Australian households and small businesses.” Mr Morrison said.
The new laws, set to be phased in by mid-2019, will force the major banks to share more detailed credit data about millions of their customers. Banks have historically kept credit data on their best customers hidden to avoid losing those customers to competitors who may target them with better deals.
Comprehensive credit history will allow lenders to access deeper and richer data and encourage higher competition across the industry. For the first time in history, this will introduce proper initiatives for consumers to pay on time and in return get greater benefits because of their credit score.
The Turnbull Government is also believed to be considering whether it will extend the credit rules to electricity, gas and phone service providers which could result in more savings for consumers.
Not sure what a credit score is? Read more here.
A recent survey conducted by iSelect showed 25% of Aussies were experiencing difficulty covering their mortgage repayments and 33% have had their interest rates increased in the past year*. With stress on living expenses, this new law couldn’t come soon enough. It will allow consumers to take more control over their debts and finances but also understand their history and encourage good financial habits.
“The great thing about letting people have greater access to their own data and their own performance on how they pay back their loans means they should be able to ask for and get a better deal because they’ve got the runs on the board to prove it,” Mr Morrison said.
Mr Morrison said changes to the credit data will arm consumers with the right information and create more transparency. The change could see lenders have the ability to scratch the occasional default you may have had against your name, allowing greater savings when applying for a new loan or re-financing against old rates.
With other countries embracing similar initiatives such as the US and the UK, it seems Australia is ready to shake up to improve its system.
Keep up to date with InfoChoice as the new credit reporting law rolls out.
Get ready for the change and check your credit score now.
Disclaimer: Galaxy Research conducted by iSelect October 2017: Interviews conducted with 2000 Australians 18 years and over who were the main or equal main decision makers in their households for financial matters.