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Monday, March 17, 2014

New Credit Rating rules you need to understand

Any time you apply for a loan, your information is shared by lenders for the purpose of assessing what sort of credit risk you pose.  This obviously helps them determine whether or not they're prepared to loan you money or not.

New Comprehensive Credit Reporting changes the way credit information can be shared by lenders and will have a significant impact on whether or not your application for financial credit will be approved.

Up until recently, you really only received a negative credit score if you defaulted on a loan or didn't pay a bill.  But as of 12 March 2014, loan and credit repayment details are just one of the additional pieces of information that lenders can pass on to credit bureaus as part of a new more comprehensive credit reporting regime.

Under the new rules, there'll be a lot more data sharing and a lot more information available to your financial institution. In fact, every time someone misses paying a bill or loan re-payment of more than $150 by more than five days, their credit file is marked and their credit rating is affected.

On the flipside, under the new regulations, the data provided will also include positive information such as how often repayments have been made on time, so you can actually be rewarded for your years of good behaviour.

The type of information your financial institution will be able to obtain as part the new credit checks include:
  • If repayments have been made on time over a two-year period;
  • If payment of a bill over $150 is more than 60 days late, it will be listed as a default;
  • The limit on credit cards that you have applied for;
  • The date your credit account was opened, type of account, and when it was closed; and
  • If, because of a default, someone has entered into a new varied arrangement for repayments.
For more information on the new regulations, what it will mean for you and other ways you can take control of your credit history, click here.

In the meantime, click here for our brochure on Protecting Your Credit Reputation, which includes more details on the new rules, as well as handy tips for getting yourself a good credit rating, and avoiding a poor rating.

Of course if you'd like to hear more of what I have to say on the matter, click here for a recording of my most recent "You & Your Money" radio segment on 98.1FM Radio Eastern.

Talk soon,

PS. Special thanks to our Senior Financial Adviser Michael Crowe from whom I pinched a lot of this information!

PPS. Please don't keep me a secret!  If you know someone who'd enjoy this or find it useful, pass it on! 

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