Lenders are shifting from negative to positive credit scoring, meaning on-time bill payments will now improve your score instead of just avoiding damage. The speaker explains how to manage payments under this new system and what it means for borrowing.
Hi. Happy New Year. Hope all is well and your year's got off to a fantastic start. I just wanted to educate you guys today about a change to the way your credit history is scored. And it's something where we're now shifting in two weeks to a credit scoring very similar to the United States of America, where every single bill that you pay on time increases your credit score, every single loan that you pay back increases your credit score and is a really positive sort of affirmation. Whereas every single bill you pay late as of March 2014 is now going to impact your credit score. So what this has been in the past where if we didn't have a default, we haven't been made bankrupt. It was a negative based credit scoring system. And so it doesn't matter what was happening with your bills, as long as you didn't default or have a bankruptcy, then you were able to get credit. Whereas now they're shifting to a more onerous and holistic sort of credit scoring where every single bill you pay, every single loan that you pay is now going to be monitored on an ongoing basis. So if you're going to try and get financed to another institution and for whatever reason you've been below or behind on your bills, then they're going to be aware of that. And so, yes, you may not have any defaults, you may have never been made bankrupt, but if you're late paying your bills, that will adversely affect your credit history. So as of March, it's a totally new game there. It's all about credit score. And you really want to make sure that your organisation skills are up to speed. You're paying all your bills on time and you're increasing your credit score with each and every bill that you do pay on time, as opposed to the opposite, which is adversely affecting your credit score because you're late with payments and those sort of things. So the banks are now going to be able to see a lot more of what's happening behind the scenes. And I think it's going to be a lot tougher to get credit because once these banks can see, okay, they missed a bill or two bills over the last three or four months, in their mind, they're thinking, no, you're not disorganized, they're thinking you're struggling with the payments. And so I think it could have a negative effect on a lot of people trying to borrow out there. But for those of you out there who are awesome at paying on time, all your bills are met within the required time. Then you're going to have no problems with that at all and it's going to enhance your credit score there. Yeah change in legislation the credit scoring is now going from a negative credit score to a positive credit score and that means that for every bill you pay for every loan you pay you're going to be scored accordingly and making sure that you are up to speed and on time with all bill payments is absolutely imperative. If you were to look at borrowing for investment properties or anything of that down the track so hopefully keep an eye on things keep organized Obviously we're here release payments for any bills within 24 hours I'd love you to get all your bills direct debiting out of your home loan account. I think that's going to be the smartest thing for you. That means you never have to worry about or think about it going forward. So any questions please give us a call in the office and we look forward to speaking to you very soon. Take care.
