Tens of thousands of Australians whose credit ratings have been unfairly impacted by civil court actions such as court writs, summons, and judgments can breathe a sigh of relief.
The Office of the Australian Information Commissioner (OIAC) approved changes to the Credit Reporting Code (Privacy) 2014 which limits the types of information that can be included on credit reports.
The new changes ensure that publicly available information which is not relevant to an individual’s creditworthiness is not included on credit reports.
Court writs can no longer be listed on credit reports
Writs and summons will no longer be considered publicly available information, and can no longer be listed on credit report, starting 14 February 2020 under the new changes.
This is a big win for consumers.
“Having a court writ on your credit file is only second to having a Telco default as the biggest barrier to getting a loan”, according to Graham Dossel, chief executive officer of MyCRA Lawyers.
Under the old system, civil disputes (court writs and summons) were weaponised and used as leverage. It didn’t matter if the civil dispute or the civil claim had no chance of success.
For example, a business owner may get into a minor dispute regarding services rendered, that dispute doesn’t even have to make into court to appear on the owner’s credit file. A civil claim was enough to impact someone’s credit file.
A disputed civil claim was enough to impact someone’s credit file to the point that they couldn’t qualify for loans.
There were even malicious cases wherein, ex-partners were suing their former partners to dry up their funding.
This has been a much-needed change in the Credit Reporting Code.
Only credit-related judgments to be listed on credit reports
“Now only judgments can be recorded on someone’s credit file, and those judgements must relate to credit to impact someone’s credit rating”, Graham added.
What’s a non-credit-related judgment?
A person to person judgment is not credit-related, i.e. if someone fails to pay their City Council rates, the judgment cannot be listed on their credit file, since the judgment is not credit-related and the City Council does not hold a credit license.
Let’s look at another example. If you were in dispute with your mechanic, they could still make a claim for the amount owed and get a judgment, but the information will not show up on your credit file since it’s not credit-related and they do not hold a credit license.
Basically, judgments that are not credit-related should not appear on your credit file and are removable.
How can I remove non-credit-related judgments?
Once the legislation comes online on 14 February, people don’t need to do anything.
However, in cases where a non-credit related judgment is still listed on your credit file, you can notify the three credit reporting bureaus (CRB) and ask them to remove it as per legislation. You’ll have to contact each individual CRB individually.
Can I remove a credit judgment?
In most cases, a judgment is only removable if it’s paid since a judge has ruled that payment has to be made.
For Australians with the time but not the money, they can do this themselves. Still, for others, Graham recommends that they hire a lawyer.
Easier to put a ban request on credit reports
Until now, a consumer had to individually contact and notify all Credit Rating Bureaus (CRBs) to put in a ban period on credit applications.
With the new amendments, when requested, CRBs are obliged to notify other CRBs of a consumer’s ban period request.
This change makes it easier for people to prevent identity and credit fraud.
What are the new changes to the Credit Reporting Code?
To summarise, under the amendments:
- Writs and summons will no longer be considered publicly available information, and can no longer be listed on credit reports.
- Publicly available information which is not relevant to an individual’s creditworthiness is not included on credit reports i.e. judgments must relate to credit to impact someone’s credit rating.
- Credit reporting bodies (CRBs) will no longer be able to use pre-ticked direct marketing consents.
- When requested, CRBs are obliged to notify other CRBs of a consumer’s ban period request.
- A Repayment History information (RHI) code ‘X’ will be introduced, intended to more accurately indicate when payment is 180 days or more overdue.
For more information on the changes, please see OAIC’s website.
Can you get approved for a home loan with a bad credit score?
Adverse credit listings can see your home loan application getting knocked back by the banks. However, there are specialist or non-conforming lenders who are more flexible with their lending policies.
They offer what’s known as bad credit home loans, which are designed to help Australians outside of the box who don’t meet the bank’s strict lending criteria.
To find out if you qualify for a bad credit home loan, speak with one of our specialist mortgage brokers by
giving us a call on 1300 889 743 or by filling our short no-obligation assessment form.