The average Australian household was carrying somewhere around $300,000 in debt as of June 2025, most of it credit card and mortgage debt. But other forms of debt were also in the mix, including outstanding balances on buy now, pay later (BNPL) products, personal loans, and payday loans. A lot of this eventually gets paid off, but when it doesn’t, people and businesses can be forced to go bankrupt, to their long-term detriment. 

A recent report from Financial Counselling Australia (FCA) – – reveals that more and more businesses are compelling debtors to file for bankruptcy, especially in sectors where consumer protections are weak and both hardship relief and dispute resolution are hard to come by.��

In the six years since the FCA released its initial report, better data has become available, and what it shows may come as a surprise to many Australians.

ATO, strata bodies, non-bank lenders top the list

The report draws on the 6700 creditor’s petitions (forced bankruptcy applications) filed in the Federal Court for the financial years 2021–22 to 2024–25. It reveals that most of the forced bankruptcies were at the hands of a small number of creditor types.

One of those is the Australian Tax Office, the creditor that drove the most bankruptcies over the reporting period (13% of the subjects of ATO petitions). But the ATO was followed closely by strata bodies and non-bank lenders, which each forced 12% of the subjects of their creditor petitions to file for bankruptcy. Strata-related bankruptcies went up 33% nationally since 2021–22.

Since FCA’s 2019 report, the number of creditor petitions that led to bankruptcy has tripled, “with serious and potentially avoidable consequences” for the people involved, FCA says. In the financial year 2024–25, four out of ten creditor petitions resulted in forced bankruptcy, often over debts as small as $10,000.

In previous years, debt collectors and major banks drove the bulk of the bankruptcies. Both sectors have mandatory consumer protections.

“Forced bankruptcy is one of the most serious tools available to creditors and should only be used as a genuine last resort,” says FCA CEO Dr Domenique Meyrick.

“Our report shows that without stronger safeguards and modernised laws, Australians risk losing their homes and livelihoods unnecessarily over relatively modest debts.”

FCA is calling on the federal government to raise the bankruptcy threshold to $20,000 and to expand hardship protections and regulatory oversight across high-risk sectors, including strata, motor vehicle finance, small business lending, government, and education.

Put into debt by a partner

Coerced business debt – which can lead to bankruptcy – is another issue raising concerns among consumer advocates. A recent report from Monash University and the Redfern Legal Centre revealed that women are most often the victims of this form of financial abuse, belatedly discovering that their ex-partner had secretly involved them in their business affairs and made them responsible for debts they had nothing to do with incurring.

In many cases, affected women only find out about the debt after being contacted by the ATO.��

“These victim-survivors often can’t afford legal representation, and the business structures they’re trapped in are costly and complex to unravel,” says Redfern Legal Centre’s Jasmine Opdam, adding that business creditors “are not legally required to have hardship policies”. 

Monash Business School’s associate professor Vivien Chen says the research “exposes a significant policy blind spot”.

“While Australia has made progress in addressing financial abuse through consumer credit reforms, there has been little recognition of how company and tax systems can also be exploited to cause harm,” Chen says. “We need to treat coerced business debt as a serious form of economic abuse and design safeguards to reflect that reality.”

The post Which creditors are forcing Australians to go bankrupt? appeared first on ����Vlog.

A prominent community legal centre is calling for urgent reforms to the credit reporting system after handling a case involving a customer who was told that his home loan could be denied because of a debt on his credit report of under $2.��

The system doesn’t require banks to inform customers of such a minor debt.

The call for reforms to credit reporting is timely. The federal government is currently undertaking a review of the credit reporting framework, which falls under the Privacy Act and the National Consumer Credit Protection Act.

Advocates say both are out of date.��

Recent case highlights issues with the system

Karen Cox, chief executive officer of Financial Rights Legal Centre (FRLC) in Sydney, says the inadequacies of the credit reporting system were dramatically highlighted in the recent case mentioned above, which involved a client, Sam*, and his interactions with National Australia Bank (NAB).��

Lack of notification to consumers in the credit reporting regime is one of FRLC’s key concerns.

“We think that there would be a whole lot of benefits to people being notified as soon as something, such as a late payment, is reported because it’s better for the lender if people can course-correct and it’s better for the person to know and to sort out any dispute in a timely fashion,” she says.��

“What happened is an unacceptable case.”

A $1.50 debt

The $1.50 of debt was lodged on Sam’s report behind the scenes. He had stopped using a Citibank-branded credit card in 2023 and thought he had paid it off. Citibanks’ Australian consumer business was bought out by the National Australia Bank in 2022.��

Unbeknownst to Sam, nominal fees and interest charges continued to accrue on his Citibank card and every month a black mark was recorded on his ‘repayment history information’, which formed part of his credit history sent off to external credit reporting bureaus.��

His ‘debt’ to the bank grew by two cents a month, eventually reaching $1.66. The first he heard about it was when he tried to get a home loan earlier this year with NAB, only to be told the debt could lead to his loan pre-approval being rejected due to what they said was his bad credit history.��

“I was bidding on the property and I had to cancel my bid because I just wasn’t sure what was going on (with my pre-approval). So I lost the property I wanted over it,” he says.

Simple fixes

In the end NAB approved his home loan application, but Sam says he is still going through the process of trying to get his credit record cleared up and the black mark removed.��

He says a simple notification from the bank about the debt would have resolved the issue within minutes.��

“It could have been a personal phone call and someone at the bank saying, look, there’s a bit of an issue,” he says.��

“It’s a negligible amount of money. They should have a threshold above which it should be allowed to be submitted to affect someone’s credit record,” Sam adds.��

There is currently a $150 threshold for official default notices on credit records, but no threshold for a negative ‘repayment history information’ notice. Sam’s black mark didn’t specify the size of the debt, only that he had missed payments.��

NAB apologises��

NAB executive Alan Machet says that when Sam initially paid off the balance of the credit card the account should have been closed.��

“The fact that didn’t happen was an oversight and has caused unnecessary distress. We are sorry this happened,” Machet says.��

“We’ve now asked these bureaus to restore his credit file and are reaching out to him to offer any further support we can provide. It’s clear we weren’t at our best here and we apologise.”��

The federal government’s review of the credit reporting framework is open for consultations until the end of May with a final report to be handed down on 1 October.

*Name has been changed.��

FRLC is asking for anyone who has ever had incorrect information on your credit report to please take this����Consumer advocates are asking the government to make changes to the credit reporting laws and your stories and experiences are really important.

The post Sam was told he could be denied a home loan because he owed $2 on a credit card appeared first on ����Vlog.

On this page:

• How to order your free credit report
• What's on your credit report
• How long the information stays on your credit report
• How to fix mistakes on your credit report

That’s why it’s a good idea to order your credit report regularly to make sure everything is up to date and your credit rating is not affected by incorrect information.��

In Australia, your credit history is held by three private credit reporting agencies – Illion, Equifax and Experian – and you can do a credit check for free every three months.

How to order your free credit report

Credit reporting agencies are required to make free credit reports available, however they also offer paid express credit ratings and other options, such as a credit alert or credit score.��

The paid services are advertised prominently on their websites, while the link to the free credit report may be less prominent, so be careful to select the free option.

You can order your free credit file from the agencies’ websites or by phone:

• , phone 138 332
• , phone 1300 783 684
• , phone 1300 734 806

What’s on your credit report

Personal information

• Name
• Date of birth
• Current and previous two addresses
• Current or previous employer
• Driver’s licence number
• Credit application(s)

Credit defaults

You will earn a black mark for the following:

• Being 14 days late or more on any of the following types of credit:
  • credit cards
  • car finance (car loans)
  • home loans
  • personal loans
  • store finance offers
  • other types of consumer credit
• Being 60 days late or more on a bill of $150 for utilities such as electricity, gas or phone
• Bankruptcy
• Court rulings against you
• Not contactable – consumer has a serious credit infringement and has not been contactable for six months

Other information recorded

• The date a credit product (e.g. mortgage, car loan, store finance offered by a licensed credit provider) was opened and closed
• The maximum credit limit
• Whether you made the minimum payment on time (recorded each month).

How long the information stays on your credit report

• 5 years – bankruptcy
• 5 years – payment default for consumer credit��
• 5 years – late payment of more than 60 days on utility bill
• 2 years – late payment of more than 14 days on credit card, home loan or personal loan

Read more at the OAIC guide to .

����Vlog tip: Help protect your credit rating by setting up a direct debit for at least the minimum payment on all your credit cards and other loans to avoid late payments.

How to fix mistakes on your credit report

Credit reporting agencies can make mistakes, or the information they receive may not always be correct.��

If you’ve noticed incorrect information in your credit report, contact the utility company or credit provider, or the credit reporting agency, and report the error.

Once the problem is fixed, the credit reporting agency should notify you in writing.

If the problem on your credit file is not fixed, contact the relevant external dispute resolutions scheme – the utility company or credit provider and the credit reporting agency will be able to tell you the correct scheme.

If you’re not satisfied with the dispute resolution scheme’s decision, you can make a complaint to the .

The post How to protect your credit rating appeared first on ����Vlog.

New data released by ����Vlog has revealed the top suburbs in mortgage stress across Australia, as the government vows to push ahead with its axing of safe lending laws that protect consumers.

Data from Digital Financial Analytics analysed for ����Vlog found Tasmania to be the state hardest hit by the mortgage crisis.

More than 55% of households with a mortgage in Tasmania are deemed to be in mortgage stress. Launceston leads the list with more than 4700 households on the brink.

“Tasmania was once one of the most affordable places in the country to live and now communities like Launceston are living on the brink,” says ����Vlog banking policy expert Patrick Veyret.

“The Banking Royal Commission was clear: lenders routinely broke safe lending laws and trapped people into unaffordable loans. Commissioner Hayne recommended that safe lending laws be enforced, not dismantled.

“Safe lending laws are an essential consumer protection to ensure that banks don’t load people up with excessive debt,” says Veyret.

Government presses on with plans to axe safe lending laws

This new data comes as the federal government struggles to gain enough support in the Senate to axe safe lending laws, with more crossbench Senators announcing they will not support the government’s policy.

Last week Senator Pauline Hanson announced that she and her One Nation colleague would not be supporting the government’s legislation.

Tasmanian Senator Jacqui Lambie has signalled that she’s against the bill, and South Australian Senator Rex Patrick has said he is unlikely to support it.

But Treasurer Josh Frydenberg has vowed to push ahead with the bill, still hoping to get a deal in the Senate despite growing opposition to it.

Pinch felt across the nation

Meanwhile, the top South Australian postcode in mortgage stress takes in the suburbs surrounding Salisbury in Adelaide’s north, with more than 5700 households feeling the heat.

Toowoomba and surrounding suburbs topped the list for Queensland, with more than 9600 households in mortgage stress.

Nationally, Western Sydney and Western Melbourne were both found to be the national hotspots for mortgage stress. The 10 crisis suburbs for New South Wales and Victoria represent over 130,000 households on the brink.

“These are households where from fortnight to fortnight, people are spending more than they are earning. That means that they have to make difficult choices, like whether to put food on the table or keep up with repayments. If they can’t maintain the juggling act, they risk losing their homes.” says ����Vlog CEO Alan Kirkland.

“Safe lending laws were put in place to avoid the huge damage to families and communities caused by mortgage stress – by making banks take care to avoid giving people loans they won’t be able to afford to repay.”

“If the government gets away with its plan to axe safe lending laws people who are desperate to get into a rising housing market will be at risk of overexposure and people who need to refinance won’t be adequately protected,” says Kirkland.

“We call upon the government to ditch its irresponsible plan. Now is not the time to give more power to the banks,” he adds.

More than 39,000 Australians and 125 organisations have signed our open letter calling on parliamentarians to save safe lending. Add your name at .

The post Mortgage stress on the rise across Australia, with Tasmania hit hardest appeared first on ����Vlog.

Australia’s largest consumer credit reporting bureau, Equifax, has a duty to keep our personal information safe from cyber criminals. But the recent experience of one consumer suggests the company’s safeguards leave plenty of room for improvement.��

John, a ����Vlog member who describes himself as a retired IT expert and cyber-security buff, discovered in September 2019 that he and his wife’s Equifax credit reports had been illegally accessed.��

“I suspect that the cybercriminals obtained some of my personal information elsewhere first, then used their existing captive account of an innocent small company to log in to the Equifax credit search portal,” John tells ����Vlog. “Equifax has since notified us that they have shut down the compromised company account.”

John was alerted about the breach via Secure Sentinel, an information and identity protection service owned by Equifax (and no longer available to new customers).��

“We received an immediate alert that the unauthorised credit search had occurred, and were able to notify Equifax immediately to place a ban on our credit files,” John says. “We were effectively watching the cybercriminal activity unfold in real time.”

Equifax acted quickly and blocked further access to John and his wife’s credit reports.

As well as contacting Equifax, John got in touch with IDCare, a nonprofit anti-ID theft service, which referred the case to Equifax’s head of fraud prevention. John says it “helped expedite things”, adding: “I wanted to make sure that I had proactively nipped this in the bud, because if it gets out of control it can turn into a personal disaster and often there is little the authorities can do.”��

The breach meant the cybercriminals had John and his wife’s personal information in their hands, including their:

• names
• dates of birth
• driver licence numbers
• occupations and employers
• �������������
• credit ratings��
• credit histories.

It’s the kind of information criminals can use to steal your identity and take out a loan or credit card in your name, among other things.

Inadequate credit report protections

John says that what bothers him about Equifax’s handling of the security breach is its refusal to rethink its approach to keeping consumers’ credit reports safe from cybercriminals.��

After the breach was confirmed, Equifax offered an initial 21-day ban on access to John’s and his wife’s reports, as is standard policy.��

It was followed by a three-month ban, but John had to make a strong case to Equifax to put this longer ban in place.��

The three-month ban can be renewed, as it has been in John and his wife’s case, but only on request. And Equifax has the right to deny that request.

“I don’t believe the durations of these credit file freezes are anywhere near adequate,” John says of the current timeframes. “Once someone’s personal information has been compromised, it is potentially in circulation in criminal databases for the rest of that person’s life. All the criminals have to do is wait three weeks to a year before they exploit the data.”��

John says he also thinks 12 months’ access to Equifax Ultimate and its credit file alert service, which Equifax offers free to victims of breaches, is too short.��

The service alerts consumers when a lender accesses their credit report, indicating someone has tried to take out a loan or get a credit card in their name. Without this service, the consumer might never find out.��

Aside from what he sees as inadequate protection, John says he has another issue with Equifax: he hasn’t been able to activate his free subscription, despite trying many times.

Credit search bans – not good for business?

John says he suspects that a commercial motive lies behind Equifax’s lack of flexibility on the time limits.��

Like its parent company in the US and credit reporting bureaus in general, Equifax Australia gets much of its revenue from lenders who pay a fee to access the credit reports of prospective borrowers to determine their creditworthiness.��

Equifax Australia says it holds data on 19.4 million individuals. The consumer credit reporting industry in Australia currently generates about $727 million in yearly revenue.

“Equifax earns its living by selling access to citizens’ credit file information, and it appears to me that they want to minimise the time it is in ban state,” John says.��

“Equifax makes a few dollars per search, while the victims of breaches may have their life savings stolen. I think Equifax should be more accountable for the security of their systems, and offer a lot more long-term protection when that security is breached.”��

In September 2017, Equifax in the US announced a security breach that happened in July 2017 and could have affected about 143 million US consumers.��

“I expect they will not want to extend the free data protection concessions,” John says. “If those numbers were repeated, they could go out of business.”

Equifax refuses to budge��

Events overseas didn’t stop John from pressing his case with Equifax Australia and asking that the ban on access to his credit report and his subscription to Equifax Ultimate last longer.��

But, in the end, his efforts proved fruitless.��

“I have surrendered,” John says. “If 143 million data-breached US citizens, with their army of lawyers and congressmen cannot negotiate a better deal, then I give up.”��

Equifax has repeatedly renewed the three-month ban on access to both John and his wife’s credit reports on request, but John says the company could do much better.��

“I am a retired IT expert with an interest in cyber security and free time on my hands, and I have found it extremely difficult and time-consuming to work my way through the Equifax bureaucracy to get results, which I have still not fully achieved after three months,” he says.

John says holding Equifax to its promise of a free 12-month subscription to Equifax Ultimate and its credit file alert feature has been frustrating. The service normally costs $14.95 a month.����

“It has been as difficult as extracting teeth to receive the offer letters, then obtain the process to subscribe, then subscribe,” he says. “Ninety-five days after the security breach event, after much follow-up with Equifax, my subscription is still not active for either my wife or myself.��

“The latest roadblock is an error message when I attempt to create an online account: ‘oops, something went wrong. That action is not allowed. Thanks for your understanding.’ I tried four different browsers and two different Windows PCs. I am wondering if Equifax really wants to give away these free subscriptions.”

What Equifax Australia says��

First, we asked Equifax whether John’s hunch was correct – that it wants to limit the time a credit report is banned from access for commercial reasons.��

Second, we asked whether Equifax was deliberately making it difficult for John to access his free 12-month subscription to Equifax Ultimate, preferring instead to collect the regular fee of $14.95 a month.��

Equifax corporate communications manager Belinda Diprose responded: “We’re disappointed to hear that the ����Vlog member who contacted you has had difficulty in accessing his free Equifax Ultimate subscription, this is certainly not our intention.��

“We would need to look into the specific details of this case to help resolve it as quickly as possible.”

Diprose did not respond directly to our first question, although she did make it clear that Equifax would extend the three-month ban indefinitely if it received a formal request.

Meanwhile, John says he’s been in touch with the company again and again about his free Equifax Ultimate access. But instead of a resolution, he’s been getting the runaround.

The post What happens if your Equifax credit report falls into the wrong hands? appeared first on ����Vlog.

On this page:

• People in the dark about credit reports
• Credit reporting bureaus rake in the profits
• Reports not designed for consumers
• Credit denied on shaky grounds
• Mistakes or muddle?
• Equifax's spotty track record
• What to do if there's a mistake on your report
• The regulator weighs in

You may not realise how much power credit reporting bureaus have over your financial life, and you may not know how to read a credit report.

But don’t feel left out.

Most Australian citizens and residents have never accessed their credit report, even though we certainly should.

And, in case you didn’t know, we’re entitled to a free one every year.

In theory, our credit reports contain information that reflects our ‘creditworthiness’. Banks and other lenders will take a look when we apply for a home loan, credit card or any other loan.

If they don’t like what they see, they probably won’t extend your credit, which can really foul up your plans for the future.

Credit reports may be useful for banks, but how useful they are for consumers is another question.

People in the dark about credit reports

According to the Credit Reporting Code, credit reporting bureaus are obligated to “present the information clearly and accessibly and provide reasonable explanation and summaries of the information to assist the access seeker to understand the impact of the information on the individual’s creditworthiness”.

Yet, for those of us who don’t work in financial services, these reports can appear to be written in code, even though they’re supposed to be perfectly clear to the people whose information they contain.

What look like mistakes may just be entries you don’t understand. And yet the contents of these reports can have a really big impact on our lives.

Credit reporting bureaus rake in the profits

Overall, about one in four Australians have concerns about their credit rating according to a recent nationally representative survey conducted by ����Vlog.

And although we’re entitled to a free report every year, one in eight people who have accessed their report paid for the privilege – with almost half either being told they had to pay, or unaware that it should be free.

One in three Australians don’t understand how credit reports work or what they mean, and 68% of us have never seen our credit report.

Meanwhile, credit reporting bureaus have been raking in the profits in recent years, benefiting from a hot housing market, and a general increase in lending and household debt. (More household debt means more credit checks, which is one of the services potential lenders pay credit reporting bureaus for.)

In fact, the industry is currently generating about , and about $166 million in profit.

Reports not designed for consumers

In the case of Australia’s largest consumer credit reporting bureau, Equifax Australia (formerly Veda), adherence to the Credit Reporting Code – on the point of clarity at least – appears to be pretty spotty.

And its lack of adherence seems like a pretty big deal. The company has an 85% share of the consumer credit reporting market and says it holds data on 19.4 million individuals.

But Equifax may not be alone in providing credit reports that defy comprehension.

IDCare is a nonprofit that helps Australians deal with identity theft – which is often discovered through credit reports. As managing director David Lacey puts it, “it’s an industry that’s been built on business-to-business relationships, even though it’s based on consumer data. The reports are not really designed for consumers to readily understand”.

Lacey describes getting hold of and understanding credit reports as a process “subject to a lot of friction”, even though they’re “front and centre” when it comes to identity protection.

What’s more, credit reporting bureaus can and do make mistakes.

Credit denied on shaky grounds

When a credit reporting bureau hands over incorrect information to a potential credit provider about your credit history, your application can be knocked back.

Or you may be approved but have to pay a higher interest rate – whether the information on your report is accurate or not.

And if you find the time and energy to try to get a mistake fixed, there’s a good chance you’ll end up in a runaround between the alleged creditor and the credit reporting bureau – both of which bear some responsibility to make sure the information is accurate.

Mistakes or muddle?

As part of this investigation, 27 ����Vlog staffers got hold of their free credit reports from Equifax Australia to check for any mistakes or surprises.

Eighteen of them said their reports either had errors or entries that were surprising and confusing.

For a number of staffers, credit cards that were no longer in use were still listed, active credit cards were not listed, home loan figures didn’t reflect the amounts paid off, and active home loans were not listed at all.

We contacted Equifax Australia about these issues. The company explained that the confusion could be because:��

• the credit provider hadn’t shared the information with them
• inactive credit cards stay on credit reports for two years
• any application for credit stays on reports for five years (whether or not it’s been approved or paid off)
• home loans don’t show up if they’re taken out more than five years ago.

Also, according to Equifax, outstanding home loan balances aren’t allowed to be listed.

Outright errors

Aside from these surprises, other entries looked like unequivocal mistakes, such as:

• a misspelt surname
• a wrong birthdate
• wrong previous addresses
• incorrect credit card details
• a home loan inquiry that the consumer never actually made.

Equifax didn’t address our questions about these issues, except to say misspellings could be the fault of the credit provider.

Privacy concerns

It gets worse. Without any explanation, six ����Vlog staffers were informed they’d failed to meet Equifax’s “security and verification requirements” after giving their date of birth, driver’s licence and Medicare numbers.

Equifax then asked them for a copy of their driver’s licence, a copy of their birth certificate or passport, a list of previous residential addresses and a rates notice, utility bill or bank statement in their name.

Several of our staffers decided that giving away such a trove of private information to a bureau already proven to be error-prone was too risky.

The fact that Equifax Australia’s parent company in the US (Equifax) suffered a massive data breach in 2017, when the sensitive personal information of 143 million Americans was hacked, probably didn’t help.

The hackers got their hands on people’s names, social security numbers, birthdates, addresses and, in some cases, driver’s licence numbers. All in all, they stole the credit card numbers of about 209,000 people.

But security is only a part of it. Aside from keeping your information safe, credit reporting bureaus are required to correct any “out-of-date, incomplete, irrelevant or misleading” information on request within 30 days. But many consumers have difficulty knowing when to make such a request.

Equifax says it “takes reasonable steps with respect to the accuracy of the personal information it holds” – a less than iron-clad guarantee.

Equifax’s spotty track record

Equifax Australia is expected to rake in about $321 million in 2019, according to research firm IBISWorld. But the company’s quest for profits recently landed it in hot water.

In October 2018, the federal court ordered Equifax Australia to pay $3.5 million in penalties for violations of Australian Consumer Law around “misleading and deceptive conduct” and “unconscionable conduct”.

Over a two-year period, Equifax told consumers its paid credit reports were more comprehensive than its free ones.

But, in fact, the information was the same in both. ACCC Commissioner Sarah Court put the matter plainly: “Consumers have a right to receive accurate information from credit reporting companies when they seek advice or services.”

Maybe it’s not surprising, then, that nearly as many people paid for their Equifax reports in 2017–18 as accessed them for nothing.

Then again, only a tiny fraction did either. Of the 19.4 million individuals Equifax has credit data on, only 1.27% accessed a free report and 1.003% paid for one in 2017–18.

What to do if there’s a mistake on your report

Mistakes can and do happen – as the below case studies demonstrate. There are three steps you may need to take if you find an error on your credit report.

More information, more confusion

Equifax Australia general manager Matthew Strassberg admits that credit reports can be hard to unpick, especially in the world of comprehensive credit reporting.

“The 2012 changes to credit reporting added new complexity levels to an already challenging topic,” he tells ����Vlog. “That is then reflected in consumer credit reports, particularly an Equifax report, which has many thousands of credit providers reporting information to us.

��

“With credit providers supplying repayment history information on personal loans, credit cards and now mortgages, we recognise more needs to be done and improvements will roll out over the next 12 months.”

The 2012 changes Strassberg refers to were introduced on a voluntary basis in March 2014, and made mandatory in July 2018.

Under the new regime, you can get a black mark on your credit report if you’re more than 14 days late with a payment for a credit card, home loan, personal loan, or buy now/pay later scheme. Your payment history is also recorded.

If you’re more than 60 days late with a payment of $150 or more, it will count as a default.

Before this change, you had to fail to pay a bill altogether, or go bankrupt, to be flagged as a credit risk.

The regulator weighs in

The Office of the Australian Information Commissioner (), which oversees the credit reporting industry and monitors its adherence to the Privacy Act and Credit Reporting Code, tells ����Vlog, “the credit reporting provisions regulate the collection and handling of certain narrowly defined categories of credit-related personal information by credit reporting bodies, credit providers and other recipients. They do not specifically regulate the format of the report itself”.

Credit reporting bureaus must take “reasonable steps” to ensure your record as a borrower is accurate and up to date – and take reasonable steps to fix it if it’s not.

But the reasonability standard may not be working. Complaints to OAIC about credit reporting bureaus went up during the last financial year. In 2017-18, it received no fewer than 173 complaints, mainly about the quality of credit reporting information, correction requests, and access to credit reporting information. That seems like a lot of complaints for a service that most of us are barely aware of.

According to OAIC’s complaint escalation protocol, that would mean consumers had failed in their attempts to sort out the issue with the credit reporting bureau, credit provider and other external dispute resolution services (such as the Australian Financial Complaints Authority).

Although the format of reports is unregulated, Australian information and privacy commissioner Angelene Falk tells ����Vlog that credit reporting bureaus have an obligation to help us understand what they say.

“Credit reporting bodies like Equifax, Experian and Illion are entrusted with vast amounts of our personal information,” she says. “In return, they must take steps to ensure the information they hold is accurate, up to date and secure.

“I also expect these organisations to support consumers in understanding the information they hold about them, and how it may affect decisions about their ability to borrow money.”

��

Equifax Australia does provide some explanatory material on the actual reports and has an FAQ section on its website. But nothing in the material would have eased the bewilderment of our staffers – and of Australians in general.

OAIC says – get involved

Commissioner Falk says consumers should get hold of the financial information credit reporting bureaus have on them.

“I strongly encourage people to make use of their free access to their credit reports and check for any mistakes,” Falk says. “Where information about them is inaccurate, incomplete, irrelevant or out of date, they should contact the credit reporting body to request a correction.��

“Where consumer complaints are not resolved by the credit reporting body or an external dispute resolution scheme, my office can help. Last financial year we helped hundreds of people with complaints about credit reporting issues. Outcomes achieved for consumers include corrections of credit reports and, in some cases, compensation.”

And the OAIC is willing and able to step in when necessary, Falk says. It has the power to investigate, order compensation and issue fines.

“Where we’re made aware of a credit reporting body failing to comply with the rules – including their obligation to present information clearly and accessibly, and provide reasonable explanation and summaries – we may initiate our own inquiries.”

The post Credit reports from Equifax surprising, confusing or incorrect appeared first on ����Vlog.

On this page:

• Change 1: minimum repayment amounts
• Change 2: caps on redrawing additional payments
• How will this affect me?
• Flexible banking, or grab for more interest?
• What should I do with my redraw balance?

Commonwealth Bank is making changes to its mortgages and personal loans that affect how minimum repayments and loan redraw balances are calculated. These changes affect customers with variable rate principal and interest owner-occupied home loans, home investment loans or personal loans.

Changes to redraw come into effect on 1 September, while changes to minimum repayments took effect on 31 July.

As of 30 June 2018, CBA has $381 billion in home loan balances on the books. Three quarters of the bank’s 1.5 million mortgage accounts are ahead on their payments – on average 32 months in front. That means there’s a lot of extra money sitting in redraw balances or offset accounts.

Change 1: minimum repayment amounts

The first set of changes applies to the way your minimum repayments are calculated. The changes took effect on 31 July.

Minimum repayment amounts are the baseline amount the bank expects you to regularly pay back. Previously, making extra repayments on your loan meant you could pay if off faster – and pay less interest. Your minimum repayment amount would usually only change if your interest rate did.

Now, when you make an additional payment, your minimum repayment amount will decrease. Instead of paying the loan off faster, you can choose to reduce the amount of your regular direct debit repayments. The benefit is lower regular repayments (and more disposable income), but at the cost of a longer loan and higher interest costs.

Change 2: caps on redrawing additional payments

The second set of changes affects customers who’ve made extra payments on their loan, and wish to re-borrow (or ‘redraw’) some of it..

Previously, when you made additional payments on your loan, you could redraw some or all of the amount later on. Many people park their savings in a mortgage – by making additional payments above the minimum – and redraw it when needed. Instead of earning interest in a savings account, they can reduce the amount of interest they pay on their loan. As long as you keep up your repayments, you could redraw the entire amount of your additional payments and still end up paying the loan off early.

New rules will cap the amount you can redraw. You’ll now be allowed to redraw up to the amount you would owe if you’d only made the minimum repayments. The calculation of this ‘bare minimum’ balance also takes interest rate changes into account.

This will affect people who reduce their repayments, as described in the section above. CBA says the new rules directly only affect a small number of people, but if you’re toying with the idea of lowering your repayments you should pay attention.

How will this affect me?

Flexible banking, or grab for more interest?

“Our customers have told us they’d like greater flexibility and control in managing their home and personal loan repayments,”says Daniel Huggins, CBA executive general manager of home buying. “So we introduced this change to offer them that flexibility and support as they pay off their loan.”

“This change aligns the Commonwealth Bank with industry practice and ensures our customers will not experience unexpectedly large increases to their loan repayments if they access a lump sum from their available redraw. This change also protects our customers by ensuring they can only redraw amounts that keep them within their contracted loan balance.”

On the one hand, being able to get ahead on a loan and then wind back your repayments can help if you find yourself in temporary financial straits. However, if you choose to keep paying the bare minimum it will cost you in the long run.��

“It’s crucial to understand how even small changes to the amount you repay can have serious knock-on effects when it comes to the overall cost of your mortgage,” says Sarah Agar, head of campaigns and policy at ����Vlog. “Cutting your monthly repayment by a couple of hundred dollars today can mean tens of thousands of dollars in extra interest paid over the course of the loan.”

“If you’re considering reducing your payments, ask the bank to tell you how much more it will cost you to pay off your loan.”

What should I do with my redraw balance?

It depends on what you planned to use your additional payments for. Do you want to be able to redraw it later in case of a big unexpected expense? Do you want to have a bit more disposable income, instead of seeing a big chunk of your paycheck going to the bank? Or do you want to just pay your loan off faster? Unfortunately, you can’t have your cake and eat it too.

If you want credit for a rainy day, you shouldn’t reduce your payments when the bank gives you the option. CBA seems to be nudging people to open offset accounts instead of relying on redraw balances. Offset accounts are similar to everyday transaction accounts, except the more money you have in them, the less interest you pay against your mortgage.

If you want the extra disposable income, go ahead and drop those repayment rates. Just be aware that you won’t be able to redraw some or all of those extra payments later on – they’ll go toward paying off your loan. Because your loan will be paid off over the original term, you’ll pay more interest compared to someone who pays their loan off quicker.

If you want to pay your loan off faster, put your repayments up and keep pouring money into that loan. Chances are you won’t feel the effect of the new rules, but if you do need to make an emergency redraw, you can be generally sure the credit will be there.

You can adjust your direct debit amount by logging on to the NetBank tool, calling the bank (13 22 24 for home loans, 13 14 31 for personal loans) or by visiting a branch.

This is general advice only, and you should consider your own financial situation and do your own research.

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Recent investigations suggest mothers who stay at home are having a harder time qualifying for home loans. In one recent example, according to Fairfax reports,��one woman’s home loan application was rejected by a bank simply because she was on maternity leave.

The new mum and her partner had spent two years saving up a 20% deposit, but the bank refused to give her a loan; this was also despite her receiving 18 weeks of government parental pay and a letter from her employer stating her intention to return to work.

New mums seeking a home loan may be forced to make a tough choice: stay home with their baby and forget the loan, or return to work before the market prices them out.

Will maternity leave affect your mortgage application?

An ANZ spokesperson told ����Vlog: “Lending policies are based on the customers’ known or expected circumstances at the time the loan is taken out.” If the loan can be afforded on your partner’s income alone, then it should be granted. However, it gets tricky when your income is taken into account.��

“If you have repayments of $500 a week and can’t afford it because one of you is on maternity leave, then the loan can’t be granted,” says��Katherine Lane, a solicitor from Financial Rights Legal Centre.

However, there are other options. Based on the certainty that a woman is returning to work, some banks will allow you to pay interest only while on maternity leave. But lenders aren’t always flexible, and they’re under no obligation to restructure loans��to suit your circumstances.

Is it legal? And is it fair?

The National Consumer Credit Protection Act states that mortgage lenders are required to assess whether the consumer can make repayments without significant hardship –��so it’s possible that your application could be rejected. Lane says that by law, banks are under no requirement to grant loans: “At all times you must be able to demonstrate if you can afford to pay without substantial hardship.”

When asked if there is any flexibility to restructure loan repayments for women on maternity leave, a spokesperson for ANZ responded: “We understand people’s circumstances change in life, whether it’s having a baby or changing careers. For those customers requiring flexibility we encourage them to come and speak to us.”

Lane’s advice is to wait until you go back to work to apply for a home loan; this also gives you flexibility with your baby. “We want people to have choices and manage risk. Don’t over-commit yourself when you want to stay home with bub.”

What about maternity leave payments?

Women in the workforce are legally entitled to benefits while they take time off to stay home and care for their baby, (as are their partners, if they choose to be the primary carer). These include parental leave, paid parental leave, and government parental leave. However, you can’t be forced to take maternity leave.

Parental leave:��As a new mum, you’re entitled to a total of 52 weeks of unpaid leave to care for your newborn or adopted child if you’ve worked with your employer for at least 12 months. When returning to work, you’re also entitled to the same position you held prior to leaving.

Paid parental leave:��You can receive paid parental leave from your employer if you’ve worked with them for more than twelve months before the expected date of birth. You’re allowed at least eight weeks of paid parental leave. Visit the website for more on your rights.��

Government parental leave:��If you earn less than $150,000 before tax, you’re entitled to the national minimum wage of $641.05 per week for up to 18 weeks. Check whether you’re eligible online at .��

Below are some things to consider before you apply for a loan:

• Interest rates are currently at an all-time low, but they’re not expected to stay that way. Could you keep up with the repayments if they were to rise by 3%, for example? Financial counsellors at Consumer Action Law Centre in Victoria advise borrowers to consider the longer term. A low fixed rate is appealing, but if the market changes borrowers might find at the end of the fixed period that rates have soared, blowing their budget. “Even in a low interest environment, the lender must ensure the loan meets the borrower’s needs and does not cause undue hardship,” says��Penelope Hill, manager of Consumer Action’s Moneyhelp service.��“This should include considering the prospect of interest rate changes.”
• It is possible to reduce repayments while you’re on maternity leave. Banks will allow you to reduce your home loan repayments –��or in some cases, pause them completely –��for a period of time. However, there are certain requirements that you must fulfil as well as specific documentation that you will have to provide. Some banks charge fees and need you to have had your home loan for at least 12 months. Other requirements may include a letter from your employer stating your intention to return to work along with your recommencement salary. Keep in mind that in most cases, the loan still has to be repaid within its original term, so it’s a good idea to plan ahead and make extra loan payments as a buffer.��
• Set up a high interest savings account and transfer your expected mortgage payment each week (also factor in a 3% hike). This will accelerate your deposit savings and also show if you can afford a mortgage.
• ASIC’s Money Smart website is a great go-to for tips on how to help you save money, budget appropriately and get advice on home loans or how to financially prepare for your baby. The Parental Leave calculator will show you what income you have over your break so you can plan your money, as well as the impact taking a shorter or longer time off work will have on your income. The website also has a especially designed to meet the needs of women, including financial advice for when you’re having a baby.

For more advice on budgeting and planning around the birth of your child, see Getting ready for baby in our Babies and kids��section.

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