Millennials, or consumers born between 1980 and mid 2000, make up almost a quarter of Australia’s population, according to the Customer Owned Banking Association (COBA) report, “Take Charge: Credit Reporting and Millennials”.
The report researched the attitudes of younger Australians towards their credit history and how they manage expenses. The research indicated that younger Australians either did not understand or were not concerned with comprehensive credit reporting or what it might mean to them.
Australia’s credit reporting framework has recently shifted away from a negative only reporting system to a system that enables lenders to report additional information about borrowers, including their repayment history. This includes whether you have made your repayments early, on time or late and how often that has occurred.
The report found that 64% of millennials had either not heard of or did not understand the term “credit report” and 73% were not aware of the credit reporting framework changes in Australia. This is concerning because millennials will be the largest wave of consumers entering the credit market for “big ticket” items, including houses and cars.
The report also highlighted that whilst this was concerning, it also highlighted an opportunity. The research revealed that millennials are largely reward driven. 72% liked the idea of getting a better interest rate because of a positive credit score and more than half were concerned they may miss out on a deal because of a poor credit score.
The report showed millennials understood three simple messages from the comprehensive credit reporting regime:
- Your credit and other financial decision follow you
- There are consequences to poor decisions that can impact your ability to get the things you want
- There are rewards from having a good credit history, including getting a better interest rate
Whilst the report focussed purely on millennials, its message applies to everyone of any age who is in the market for finance. Your credit history can seriously impact your property and investment opportunities if not carefully managed. Most older Australians are aware that defaults listed on their credit rating can affect their borrowing capacity, but many are not aware that now even a few late payments can have an adverse effect.
If you are looking to buy a property or perhaps refinance your current loans and you are concerned your credit report may affect your future financial plans, speak to your broker today to discuss.