12 March hardly sounds like a key date in history.  But, for those looking to buy property, 12 March 2014 could be a key date that determines whether or not they get a loan.

Whenever someone applies for a mortgage, one of the first things a bank does is run a credit check on them.  As of 12 March, these credit checks are going to change – and it could have a huge impact on whether or not a loan application is approved. Under the new regime, every time someone misses their payment by more than five days, their credit file is given a black mark and their credit rating gets worse.

The current system is less comprehensive; simply registering things like the number of credit enquiries someone has made and whether or not they have any defaults. But, in addition to these, under the new system individuals will have an incentive to manage their reputation – loan applicants get green lights for positive factors such as how often they have made repayments on time.

Here are some of the things that banks will know from the new credit checks.

Whether repayments have been made on time over a two-year period

• If a repayment of over $150 is more than 60 days late, it will be listed as a default
• The limit on the credit cards for which you have applied
• The type of card for which you have applied
• The date you opened a credit account, the type of account, and when it was closed
• If, because of a default, someone has entered into a new varied arrangement for repayments

Dos and Don’t’s to Get a Good Credit Rating Under the New System

Do

• Set up automatic debits to pay your credit card and loans on time
• Close any credit facilities you don’t need
• Check your credit file http://www.mycreditfile.com.au/

Don’t

• Pay a debt more than five days later
• Shop around for credit cards and store leases when you don’t need them
• Fail to contact the lender to renegotiate your repayment terms