Credit score change to impact investors
Late payment of bills may impact on investors’ loan applications under new credit rules being introduced next year, a major independent property group has warned.
From March 2014, banks and non-bank lenders will have greater access to clients’ credit history from credit reporting firm VEDA.
Property Club national manager Troy Gunasekera warned investors with a poor repayment history may find borrowing more difficult.
“Anyone wanting to apply for a home loan should already be aware that when it comes to borrowing hundreds of thousands of dollars, banks do not look favourably on a poor credit record, he said.
“It’s about to get even trickier with big brother looking over your shoulder for even the most minor of misdemeanours.”
Currently, VEDA limits data collection to credit applications and defaults on an individual’s file.
However, from next year, the data available to lenders will include more detailed information, including instances of good credit conduct and late payment of consumer bills.
Mr Gunasekera suggested investors take steps to improve their credit history before the March 2014 deadline.
His tips include paying all accounts on time, treating unsecured credit as seriously as major loans and avoiding multiple credit applications.
He also advised investors to check their credit score annually via free online services.
In the UK, a similar switch from negative reporting to positive reporting had resulted in benefits to mortgagees with good credit conduct, according to the Property Club.
“Lenders not only tended to make more favourable decisions, they rewarded customers with marginally lower home loan rates,” he said.