The association urges the roundtable to consider its suggested reforms, warning that Australia’s current credit reporting framework significantly lags behind international standards, and that expanding the system would drive economic efficiency, boost competition, and deliver better outcomes for consumers.

“Australia’s credit reporting system is outdated and limited compared to other developed nations,” said Elsa Markula, CEO of Arca. “Modernising credit reporting represents a significant opportunity to boost productivity through better data access and streamlined lending processes, yet we’re falling behind our international counterparts.”

Arca’s submission outlines three priority reforms that would bring Australia’s credit reporting system in line with global best practice:

Enhanced data inclusion: Adding more comprehensive data types to credit reporting, including balance information and richer repayment data, would improve lending decisions and support better consumer outcomes. Research shows 60% of consumers support easier and faster loan application processes.

Fraud prevention improvements: Replacing the current consumer ban system with more sophisticated fraud flag systems would better protect consumers whilst maintaining system efficiency.

Small business support: Exploring credit reporting for small and medium enterprises through a government-industry working group could significantly support the SME sector, which employs 7.4 million Australians and contributes $700 billion to the economy.

The submission strongly critiques the recent independent Review of Australia’s Credit Reporting Framework, arguing its recommendations would hamper economic resilience through rigid data minimisation and create unnecessary fiscal burden on taxpayers.

“If implemented, the independent review’s recommendations would miss critical opportunities for productivity gains,” Ms Markula said. “Rather than restricting credit reporting, we should be focusing on catching up to global standards and unlocking the economic benefits that come with a modern, comprehensive credit reporting framework.”

Arca emphasises that modernising credit reporting would benefit both industry and consumers by enabling more informed lending decisions and greater competition amongst lenders.

“These reforms aren’t just about improving efficiency for lenders – they’re about creating a system that works better for all Australians,” Ms Markula added. “A modernised credit reporting system would support financial inclusion, help consumers access credit on more competitive terms, and contribute to overall economic resilience.”

With the Economic Reform Roundtable commencing on 19 August, Arca is calling on the government to consider these industry-backed reforms as part of its broader productivity agenda.

Arca represents 95% of all consumer lending in Australia through its membership, including 14 of the nation’s largest banks, mutual banks, consumer finance companies, fintechs, and credit reporting bodies.

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Catherine Fitzpatrick

The industry association says there is an opportunity to uplift industry practice, and drive greater consistency in how financial institutions engage with individuals who suffer financial abuse.

Arca, the peak association focussed on the use of credit reporting and consumer data, has welcomed the Parliamentary Joint Committee on Corporations and Financial Services, and called for greater industry collaboration in addressing the issue.

Elsa Markula, Arca’s CEO, said: “Arca and our members recognise the devastating impact domestic abuse can have on an individual’s relationship with credit, and how their creditworthiness is seen through the lens of the credit reporting system. More must be done to assist victims and victim-survivors when they and their representatives interact with the credit reporting system.”

“We are strong supporters of the report from the Parliamentary Joint Committee, which is far reaching and hugely significant. There is an opportunity to uplift industry practice and drive greater consistency in how financial institutions respond to financial abuse, which will see improved outcomes for victims and victim survivors.”

Arca has undertaken an extensive consultation process over the last few years, which involved engaging with a range of specialists, including lived experience experts, financial counsellors, community legal services, and government organisations. As part of this, Arca engaged social enterprise, Flequity Ventures, who worked with research partners, Centre for Women’s Economic Safety, the Independent Collective of Survivors, and the Institute of Non-Violence, to conduct lived experience research.

The research, which involved surveys and interviews with victims and victim-survivors of domestic abuse, focussed on their experiences with credit products and interactions with credit providers. A roundtable on perpetrator perspectives was also conducted, along with subsequent workshops with Arca members to identify actions.

Based on insights from victims and victim-survivors of domestic abuse, Arca has identified a need for more consistency in how financial institutions engage with individuals who suffer abuse, alongside the flexibility to tailor responses to each individual’s situation. In response to the findings, the organisation is focusing on exploring industry-led initiatives to empower victims and victim-survivors.

Speaking about the project, Catherine Fitzpatrick, Founder & Director, Flequity Ventures said: “This research with victim-survivors was expertly facilitated within an ethical and trauma-informed framework by our project partners. It was complemented by insights from professionals who have between them more than 40 years experience working with men who use domestic abuse. This is an often overlooked part of the business response to domestic abuse, but it is an important input into consideration of customer service and accountability for perpetrators with safety at the heart.”

In response to the findings, Arca and its members have already undertaken to support victims and victim-survivors of domestic abuse, including advocacy for targeted regulatory relief and associated amendments to industry codes. Arca will be commencing broader stakeholder consultation in 2025.

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Mike Laing

Research from credit information website, CreditSmart.org.au, has revealed that one year on from the adoption of Comprehensive Credit Reporting (CCR), most Australian consumers are still unaware of the changes that are impacting their credit health, and may not know how it can impact their future credit applications.

The research found that in the last 12 months, only one in four consumers checked their credit report. More worryingly, consumers who are struggling with their credit health said they were just as likely to seek advice from credit repair or debt management services as they would from their lender or free financial counsellor.

“Consumers are still largely unaware of credit reporting, what information is contained in their credit report, and what that means about their borrowing behaviour and overall credit health,” said Mike Laing, CEO of the Australian Retail Credit Association (ARCA), which founded CreditSmart.

“Our research has found that while awareness has actually increased 11% from last year, less than 1 in 3 consumers are aware that credit reporting has changed. Importantly however, awareness is higher among those with a real need to know – with one in two consumers who are planning to make a significant purchase in the next 12 months being aware of the changes,” added Mr Laing.

The rollout of comprehensive credit reporting has accelerated rapidly in Australia since last year, with more data shared than ever before. By September this year, comprehensive credit information for 80% of consumer loan accounts will be available.

“CCR allows lenders to share and view more detailed credit information about consumers to provide a clearer view of a consumers’ credit history. This is a positive move for consumers who have a strong history of making payments on time.” added Mr Laing.

Consumer awareness highest for users of riskier credit products

According to CreditSmart, credit cards make up the majority of accounts currently in the CCR system at around 87%, followed by mortgages at 9%.

Yet, people who hold these mainstream types of accounts are the least aware of the changes to credit reporting and may not be aware of the value it adds to their credit history, if they have a strong record of making payments on time.

It was also found that those consumers with products that are sometimes seen as riskier, such as leases for household goods (61%), cash loans (54%) and payday loans (79%), plus personal loans (55%), are all far more aware of the changes to credit reporting. ^[1] This could indicate the users of those products have been given more information about the changes, or that they have taken more time to understand the changes.

Consumers using these riskier products also rated their credit health as significantly worse than users of home loans and credit cards.

Interestingly, Buy Now Pay Later (BNPL) users have relatively low awareness of credit reporting changes despite significant numbers rating their credit health as poor.^[2]

Consumer awareness a work in progress

Awareness of credit reporting changes is not the same as understanding the detail behind their credit report, according to Mr Laing.

“It is easy to understand how consumers may become confused about what’s important when it comes to credit reporting and their credit health. There’s a lot of information out there and it’s important to bring it back to a simple, straightforward message.

“We want consumers to be aware of the importance of their credit history to their credit health – and how that history may impact their financial future. The steps are to understand how the credit reporting system has changed, to get your credit report to see your credit history and to manage the credit that you have responsibly” added Mr Laing.

For more information on the changes to credit reporting and where to get your free credit reports you should go to www.creditsmart.org.au, which provides clear information on the credit reporting system to assist consumers to optimise their credit health.

Key points:

• 7 out of 10 consumers are still unaware of the credit reporting changes one year on from lenders going live with CCR
• People struggling with their credit health are just as likely to seek financial advice from credit repair or debt management services as they would from financial counsellors or their lender
• Consumers using payday loans, short-term cash, and Buy Now Pay Later services are more likely to be struggling, or have lost control of their credit health
• However, half of those planning a significant purchase in the next 12 months are aware of the changes, and overall awareness is up 11% from 2018 (17% to 28%)

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Mike Laing

Consumer education website, CreditSmart, has confirmed NAB has started sharing information on mortgage payments with credit reporting bodies under the Comprehensive Credit Reporting (CCR) regime, with other major banks to follow suit.

In September last year, a major CCR milestone was achieved with all Big Four banks sharing 50% of their customers’ ‘positive’ credit information – largely Credit Cards and Personal Loans accounts. With a commitment to supply the remaining accounts by September 2019, NAB is taking the lead having now started sharing mortgage accounts from this month.

Mike Laing, CEO and Chairman at the Australian Retail Credit Association (ARCA), which founded CreditSmart, said: “Having a home loan is a major financial commitment, so the inclusion of mortgages in CCR data is a positive move for consumers who have a strong history of making payments on time.

“Demonstrating strong credit health in the past by being disciplined with repayments will be an advantage to consumers looking to take out another mortgage or a personal loan. This is particularly important as banks adopt more stringent lending processes following the Royal Commission,” he added.

What should consumers do?

Consumers who are keeping a close eye on their credit history will see these new account details reflected in their credit report.

“Under the new system, up to two years of monthly home loan repayments will be on your credit report. You should check your credit report at least once a year to make sure there are no errors or inconsistencies because there is a high chance this will affect your next application for credit.

“Another point to note is that your mortgage loan limit will be reported and visible on your credit report. This along with the limits on other accounts you may have (such as credit cards) and your repayment history will give lenders a good view of the overall amount of debt you have been able to handle,” he continued.

More comprehensive credit information gives lenders a better picture of whether you are in a position to take on new debt, and whether you manage your debt responsibly. It means that if you’ve been regular with paying your accounts, that could increase your chances of getting a loan and a lower interest rate.

For information on how to optimise your credit health, go to the CreditSmart website, set up by credit experts to help you understand how recent credit reporting reforms affect you.

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Geri Cremin

Australian millennials have a lower understanding of credit than older generations, according to research from consumer education website, CreditSmart. A huge 44% of millennials are unsure of the difference between a credit score and a credit report, and over half are unaware of what a lender looks for in a credit report.

The study revealed that only 1 in 5 millennials said they were confident about their understanding of what a credit score is, and a further 75% were unaware that they can access their credit report for free.

Commenting on the findings, Geri Cremin, Credit Reporting Expert at the Australian Retail Credit Association (ARCA), which founded CreditSmart, said: “Millennials are at a point where they may be looking to make their first milestone purchase, like their first car or first home. It is really important for them to get on top of their credit health so when the time is right, they’re in a good position to make the big-ticket purchases.”

The research also flagged that nearly a quarter of millennials think their credit report can be checked when applying for a new job.

“There are restrictions on who can access your consumer credit report. Real estate agents and employers cannot check your consumer credit report,” explained Ms Cremin.

An analysis* by credit score provider and ARCA member, CreditSavvy.com.au, found that millennials (aged 25-34) have the lowest average credit score (624) when compared with GenX (aged 45-54) at 659 and Baby Boomers (55+) at the highest level (737).

“While younger generations generally have lower scores, this doesn’t necessarily mean they’re worse at managing credit. The lower scores are often the result of young people lacking a detailed history with credit or can be linked to the types of credit younger people take out like credit cards and personal loans,” said Leo Hillary, Product Director at CreditSavvy.com.au.

“The good news is that with comprehensive credit reporting, younger Australians will have more capacity to demonstrate their credit worthiness simply by making their loan repayments on time each month.”

More millennials take action

A quarter of millennials (24%) have either checked their credit report themselves or have had it checked for credit applications in the past 12 months – more than GenX (20%) and Baby Boomers (10%). This is mainly for credit card and mobile phone applications.

Despite having low awareness of their credit health, a third of millennials are seeking advice about debt and credit (32%).  Among those who sought advice, nearly a quarter (24%) have done so via an online service of some sort, followed by searching on Google (17%), highlighting heavy reliance on online sources for seeking answers to their questions.

“It’s encouraging to see that although millennials have low awareness of credit, they are keen to learn and improve their own credit health,” said Ms Cremin.

How can millennials improve their credit health?

For millennials looking to build their credit score, Ms Cremin recommends starting with the basics.

“You’ll start creating credit history when you apply for a credit card, a post-paid phone or utility account (as long as it’s in your name). But it’s important to make sure you only take out credit that you can afford as not paying will have a lasting effect on your credit health,” she said.

Ms Cremin also recommends focusing on making timely payments. “Making repayments on time is the best way to build your credit health. Even if it’s a small loan or small credit card, as long as you make repayments on time, you’ll start building a strong repayment history, which shows potential lenders that you can manage credit responsibly. That healthy credit history will be an asset when you want a larger loan, for example a car or home loan, further down the track.

“A default stays on your credit report for five years but even a late payment can stay on your credit report for two years. The more late payments on your credit report, the more your credit score will drop.

“An easy way to stay on top of your repayments is to talk to your credit provider about setting up automated payment or direct debit. Putting your repayments on auto-pilot might help when you’re away on holiday, or busy at work, and would otherwise forget to stay on top of repayments.

“If you’re struggling with repayments, talk to your credit provider about how they can help. The earlier you discuss financial difficulty, the better,” added Ms Cremin.

The research, undertaken by YouGov Galaxy, was done ahead of important changes to Australia’s credit reporting system, which will see lenders move to comprehensive credit reporting (CCR).

By the end of September, many lenders including the Big Four Banks started sharing comprehensive credit reporting information to ensure a transparent, and fairer credit lending system.

For information on how to optimise your credit health, go to the CreditSmart website, set up by credit experts to help you understand how recent credit reporting reforms affect you.

——

*Average credit score data is supplied based on CreditSavvy.com.au’s member base and does not reflect the entire Australian population. CreditSavvy.com.au uses Experian’s credit score which ranges between 0 – 1000.

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A huge 89% of women are unaware of changes currently happening in the credit reporting system, and a third of these feel the changes will not impact them in any way. A quarter of Australian women are completely unaware of what a credit score is, and 65% have never checked their credit report.

Rebecca Murray, General Manager of Australian Retail Credit Association (ARCA), which founded CreditSmart, said the results showed a worrying gap in women’s knowledge of their credit health.

It is really important for women to be across these upcoming changes, so they can take advantage of the changes rather than potentially be negatively impacted”, Ms Murray said.

“Going forward, your credit report will become a personal asset which will hold you in good stead for when you need to take out a loan, as lenders will be able to track your account repayment habits on your accounts to assess your creditworthiness,” Ms Murray said.

It is important to understand that your credit score and credit report are both indicators of your credit health. Our research found that men are overall 10% more likely to check their credit report compared to women.

The research, undertaken by YouGov Galaxy, was done ahead of important changes to Australia’s credit reporting system which will see lenders move to comprehensive credit reporting (CCR). As part of this, the Government has introduced legislation that will mean the four major banks will be required to supply half of their customers’ comprehensive credit reporting data with credit reporting bodies by this September and the rest by September 30 next year, to ensure lenders have a complete picture when those individuals apply for credit.

Optimise your credit health

CreditSmart research found that 55% of women either don’t know or have incorrect perceptions on the cost of accessing a copy of their credit report.

Ms Murray stresses the importance of knowing your credit rights, which includes free access to your credit report annually from each of the credit reporting bodies.

“How to use credit responsibly is everybody’s business, irrespective of gender. People with good credit health will be rewarded with more choices of loan products and possibly lower interest rates, so get to know your credit report, fix it if there is something wrong and pay your accounts on time to get the credit you want, when you need it,” she added.

For information on how to optimise your credit health, Ms Murray suggested women should go to the CreditSmart website (http://www.creditsmart.org.au), set up by credit experts to help you understand how recent credit reporting reforms affect you.

CreditSmart has five top tips for keeping your credit report healthy:

1. Know what’s on your credit report: You can get a free copy of your credit report annually from each of the three main credit reporting bodies Experian, Illion (formerly Dun & Bradstreet), and Equifax.
2. Keep track of your credit score: Your credit score is like a summary of what’s on your credit report and can give you a quick indication of how credit providers see you. For free credit scores you can refer toCreditSmart.
3. Don’t let forgetfulness make you miss payments: Talk to your credit provider about setting up an automatic payment, i.e. direct debit, to make sure your regular payments are paid on time.
4. Fix anything that is incorrect: If you think something is incorrect, you can ask any credit provider or credit reporting body for help to fix that error, so long as they hold some kind of personal credit information about you. This is a free service.
5. Only borrow what you need: Having too much credit may make it harder for you to get credit for what you really need. If you have more credit than you can comfortably afford, try to close any accounts that you don’t use or decrease your credit limit. Your credit report will show credit providers how much credit you have available, even if you don’t use it.

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Damian Paull

The Australian Retail Credit Association (ARCA) has called on financial intermediaries – mortgage and finance brokers, accountants and financial planners – to use yesterday’s inaugural CreditSmart Privacy Day (7 May) as a catalyst to discussing  recently-introduced changes to the credit reporting system with clients.

On 12 March, reforms to the Privacy Act saw extensive changes to Australia’s credit reporting system , providing a clearer picture of a consumer’s ability to repay debts, enable better matching of consumer credit needs, and give fairer access to credit with increased consumer and privacy protections.

“Mortgage and finance brokers, accountants and financial planners may be the first port of call when a consumer has a problem with their credit report, and an essential link in the chain to inform their clients on the credit reporting system and their consumer rights,” said ARCA CEO Damian Paull.

“It’s vital that we help to educate consumers about what the new laws mean in practice, how credit reports are used, and what protections consumers have so we, as an industry, can help prevent any confusion around the new credit reporting system.  The CreditSmart website is used extensively by advisers to educate themselves and clarify their clients’ new consumer rights, so that they can best advise their clients how to sort out credit report-related issues,” Mr Paull said.

7 May: CreditSmart Privacy Day

Yesterday (7 May) marked Australia’s first CreditSmart Privacy Day– a new awareness day forming part of Privacy Awareness Week (4 – 10 May 2014).

“We’re delighted that CreditSmart is one of the activities during Privacy Awareness Week. It creates the perfect opportunity for financial professionals to introduce credit reporting and the associated privacy protections as part of their important conversations with clients,” ARCA CEO Damian Paull said

Privacy Commissioner Timothy Pilgrim said greater awareness around the new credit reporting system as a result of a day focussed on credit reporting is a positive thing for all Australians.

“The OAIC is releasing a number of fact sheets today to help consumers understand their credit reporting rights. The fact sheets, together with the CreditSmart website developed by ARCA, provide a good mix of formats for consumers to be better informed about credit reporting,” Mr Pilgrim said.

Consumers and financial professionals can find more detailed information on the credit reporting laws; including detailed steps and explanations on what information is included, who can access consumer credit reports, and directions for consumers to access their credit reports at the CreditSmart website.

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Damian Paull

Commonwealth Attorney-General, Senator the Hon George Brandis QC, has today requested the Credit Reporting Privacy Code (CR code) be varied so that the five day grace period for late payments recorded on a consumer’s credit report is extended to 14 days.

As the CR code developer, ARCA will make an application to the Office of the Australian Information Commissioner to vary the CR code, which went live following the start of comprehensive credit reporting in Australia on 12 March.

“Given the concerns raised by the community and reflected by the Attorney General on this matter, we agree that a 14 day grace period is an appropriate compromise before a late payment is recorded as Repayment History Information,” ARCA CEO Damian Paull said.

Comprehensive credit reporting features the inclusion of Repayment History Information which shows payments which were made or missed for each month over a 24 month cycle on a consumer’s credit report.

Understanding the difference between late payments and defaults

Repayment History Information helps improve the accuracy of predicting the credit risk of consumers, which will help lenders meet their responsible lending obligations. Ultimately, comprehensive credit reporting will ensure more consumers get better access to credit.

“It’s important consumers understand the difference between late payments and defaults,” Mr. Paull said.

“One late payment on your credit report is less serious than a default.  Any of us can be on holidays or forgetful, and a late payment can be offset by an overall positive history of paying most accounts on time. Defaults on the other hand are always more serious,” he said.

As of 12 March 2014, defaults can only be recorded on your credit history if the payment is more than 60 days overdue, is for a debt of more than $150, and you have received written notifications prior to the listing of the default.

“It’s also important for consumers to understand that only credit providers with an Australian credit license can report and obtain Repayment History Information – so late telecommunications or utilities bills will not be included on your credit report,” Mr Paull said.

ARCA has developed www.creditsmart.org.au to help consumers navigate the changes to the credit reporting regime and understand their new consumer rights.

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Credit reports previously only featured negative information about an individual’s credit history, such as defaults and enquiries, but from today some credit providers who choose to participate in comprehensive credit reporting (CCR) will also be able to share and access additional information such as repayment history information. These reforms will provide a clearer picture of a consumer’s ability to repay debts, enable better matching of consumer credit needs and give fairer access to credit with increased consumer protection.

Independent research commissioned by ARCA found the vast majority of consumers recognise the importance of having a good credit report, as either important (67%) or very important (21%). When consumers were informed about the changes, over half (53%) felt the new system will make things better for them, while 42 per cent believed they would be no better or worse off. One in four (25%) consumers feel stressed when it comes to managing credit and their own personal financial situation.

ARCA CEO Damian Paull said the positive response from consumers to the reforms to credit reporting  were encouraging.

“Consumers see the new credit reporting system as more consumer centric – and a second chance for the “not so good payers. Dealing with finances is not always easy so it’s promising Australians are becoming more aware of credit reporting and taking steps to manage their credit footprint and financial future,” said Mr Paull.“

Last month, with the assistance of Australia’s largest financial institutions and credit reporting bodies, ARCA launched their consumer education website www.CreditSmart.org.au to help improve consumer understanding of the credit reporting changes.

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Timothy Pilgrim

Ahead of the impending overhaul of Australia’s credit reporting system, the Australian Retail Credit Association (ARCA) yesterday launched a new straight-talking website CreditSmart.org.au.

The site provides a range of tools and tips to help educate consumers about the basics of credit reports and how they can proactively manage their credit history.

In March 2014, reforms to Australia’s Privacy Act will see extensive changes in the credit reporting system including the introduction of the Credit Reporting Privacy Code, which was drafted by ARCA at the invitation of the Privacy Commissioner, Mr Timothy Pilgrim.  The reforms will:

• Provide a clearer picture of a consumer’s ability to repay debts, which may enable providers to make more accurate and better informed lending decisions
• Enable better matching of consumer credit needs, which may reduce the risk that consumers commit to repay more credit than they can afford
• Give fairer access to credit and increased consumer protection

The launch of CreditSmart.org.au is the first step in ARCA’s consumer education campaign, aimed at helping all Australians take more control over their credit reports by providing unbiased and fair information.

“It is important consumers are aware of these changes as they will affect what is in their credit report and what information can be accessed by credit providers. Together with many of Australia’s largest financial institutions and credit reporting bodies, we’ve built CreditSmart.org.au to help improve consumer understanding of these changes,” ARCA CEO Damian Paull said.

Aussie spending habits are a good reason to get CreditSmart

Australians currently have about $34 billion in credit card debt, and research suggests that around 13 per cent of people pay only the minimum repayment off their account each month.  Considering Australians spent around $24 billion on credit cards in the lead up to Christmas, it seems we are still using credit to finance our everyday purchases – although our balances are falling.

Credit reports are routinely requested by organisations when consumers apply for loans, mortgages, credit cards or even a mobile phone plan. Credit reports historically only featured negative information about an individual’s credit history, such as defaults, but this will start to change from March 2014 when some credit providers who choose to participate in comprehensive credit reporting will also be able to share and access additional information such as repayment history behaviour.

According to independent research commissioned by ARCA, 59 per cent of consumers have not heard of credit reporting.  Those who had heard of it predominantly associated it around ‘negative’ aspects of their credit worthiness.

“While the launch of CreditSmart is an important step towards improving consumer understanding of these changes, the fact is most consumers don’t understand what their credit report is for and how they can use it to their advantage when using credit in a sensible way. We want to empower Australian consumers to take control of their credit report to assist them to better manage their financial position,” Mr Paull concluded.

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