While Australians would love more competition in the finance sector, only a small proportion know about one of the most vital tools in this area: positive credit reporting.
New research commissioned by GetCreditScore.com.au and conducted by Lonergan Research found that 89% of consumers want more competition in consumer lending. However, only 15% of Australians are aware of positive credit reporting, with this figure dropping to only 12% of millennials.
Positive credit reporting – also called comprehensive credit reporting – is designed to offer lenders a more holistic view of a borrower’s risk profile by including positive aspects such as paying bills on time, keeping on track with credit repayments, etc.
Luke Keller, head of GetCreditScore.com.au, expressed alarm that many Australians did not know about positive credit reporting especially as it could open up more product choice and allow for greater competition.
“Before this was introduced in Australia in 2014, credit providers only reported negative information to the credit bureaus such as when a consumer had defaulted on a loan repayment. This reform means that when a consumer does the right thing – such as making loan repayments on time – this information will also be included.
“Giving lenders a holistic picture of your financial behaviour means they can make more informed decisions, leading to greater financial inclusion and a fairer system.”
Keller called positive credit reporting “the most important credit industry reform in almost 30 years” but said it had “flown under the radar” for many in the Australian public.
“We’re still a long way behind the rest of the world. Positive credit reporting has been established for some time in the US and UK, and has led to product innovation such as interest rates based on your credit score and fast online approvals.”
The benefits of increased competition were acknowledged by those participating in the survey, with 62% saying it would lead to lower fees and charges, 45% pointing to more personalised pricing, 41% to faster approval times and 40% to better customer service.
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