Why you need to pay your bills on time
On March 12 Australia will move to Comprehensive Credit Reporting, giving lenders access to more data about your credit history.
The new system will include positive information, such as the credit limit of your accounts and a broader repayment history.
Then and now
Currently Australia uses a negative reporting system, meaning that the primary focus has been on denied credit requests and defaults on loan repayments or payments well into arrears. This system has limits in the type of information captured.
In contrast, Comprehensive Credit Reporting will consider more data than the negative reporting system, allowing credit providers to understand what sort of borrower you are.
This means lenders can get a better picture of your current financial reliability overall by accessing more information about your ability to meet your financial obligations – loan repayments and ordinary bill payments, on time.
Credit reporting and scoring is huge in America but it is not as prevalent in Australia.
Veda, the dominant credit report provider in Australia, has found that up to 80% of consumers are not even aware such a report even existed. This is concerning given the impact of a credit report when it comes to accessing any form of credit.
Most Australian’s aren’t even aware credit reports on their personal finances exist. As such, the consequence of a black mark (payment still outstanding after 60 days) for not making a payment will not be known until it comes time to visit the bank.
A few late mortgage repayments or bill payments could impact your ability to borrow money in the near future, possibly derailing plans to buy a home or investment property.
Getting on top of your finances and managing bill payments and expenses has never been more important for Australians!
Our tips to make sure you stay on top of your finances and pay your bills on time:
1. Make sure you have a budget in place and that you plan ahead for all your bills and expenses;
2. Set up direct debits for all your loan and bill repayments, this will ensure you never have a late repayment because you were too busy or forgot;
3. If you are changing address soon or have moved house recently, make sure you have called your bill providers and banks. Give them your new address details for any outstanding bills.
Author: Ryan Porter – Wealth Enhancers’ Goals & Values Specialist
Need some help with your bills? Our Financial Coaches can help sort you out! To chat goals with one of the WE team, book in a time for a Free Strategy Session.
Disclaimer: Information contained within this article is of a general nature. Do not be rely upon it when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.