Protect your credit rating

Even if you’re just two weeks late paying a bill, new credit reporting rules meant a black mark on your credit rating. But there's a welcome development.
 
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02.How to avoid black marks on your credit rating

Black marks on your credit rating may mean your application for a credit card or home loan gets knocked back. This probably won’t happen if the only problem with your credit rating is that you were 14 days late on a car loan payment. But you could still get penalised for making late payments.

“It’s inevitably going to lead to those consumers being charged higher interest rates,” says Katherine Lane, principal solicitor at the Consumer Credit Legal Centre.

What can you do? Arrange a direct debit for at least the minimum payment on all your credit cards and other loans so that you can avoid late payments.

What can you do? Arrange a direct debit for at least the minimum payment on all your credit cards and other loans so that you can avoid late payments.

What information affects your credit rating?

Before 12 March this year, only major infractions were noted on your credit report, such as dodging a bill altogether or paying your phone bill 60 days late. These are defined as defaults and will still go on your file, but now the unpaid bill will have to be at least $150 to count as a default, up from $100.

That’s one of only a few minor wins for consumers, since the new regime will also keep track of a range of other information that was previously unrecorded, including:
  • the date a credit card or personal loan was opened and closed 
  • the maximum credit limit 
  • whether you made the minimum payment on time.

The same applies to mortgages, investment home loans, car loans and store finance offered by a licensed credit provider such as your bank or credit union. Whether or not you paid on time will be noted each month and the information retained for two years. 

New information on your credit report can affect your credit rating

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  • 5 years is how long information about a bankruptcy stays on your credit report 
  • 5 years is also how long information about a payment default for consumer credit such as a credit card or utility bill of more than 60 days stays on your credit report. 
  • 2 years is how long information about a delay of more than 14 days in paying your credit card, home loan or personal loan stays on your credit report. 

How you can correct a mistake on your credit report

 

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