Credit reporting education
Several months since comprehensive credit reporting (CCR) went live in Australia, the Australian Retail Credit Association (ARCA) has reinforced the critical role CCR plays in contributing to the robustness of Australia’s $1.49* trillion retail credit industry and reducing financial exclusion.
According to ARCA the presence of a properly regulated CCR system assists lenders to identify financial risks more accurately (and potentially earlier), improves economic performance of retail credit lending, increases access to mainstream responsible credit and assists consumers to avoid over indebtedness by taking greater control of their credit identity.
Speaking at Informa’s inaugural Privacy Reform in Credit Reporting Forum in Sydney, ARCA CEO Damian Paull said there was a clear link between credit reporting and increasing credit accessibility.
“Global studies** show comprehensive credit reporting can be used as a tool to increase credit access and stimulate growth. CCR is also a key component of financial inclusion by increasing the pool of eligible consumers who can responsibly access credit to buy essential goods or services that are beyond the monthly household budget, such as vehicles and furniture,” he said.
Earlier in the year ARCA launched education site CreditSmart to give consumers and finance professionals more detailed information on the credit reporting laws and how to access credit reports. ARCA is currently working with key industry bodies and financial services providers to raise greater awareness of the implications of the new credit reporting regime.
“The World Bank quite rightly states that credit reporting is a vital part of a country’s financial infrastructure and is an activity of public interest. While it’s still early days for comprehensive credit reporting in Australia, some consumers still don’t realise they are entitled to a free credit report every year, or what the new credit reporting environment means for them.
“Change isn’t going to happen overnight but clearly more needs to be done in placing credit reporting more firmly on the financial literacy agenda,” he said. *RBA data March 2014 **Political & Economic Research Council (PERC) studies (US) – 2009/10.