Icon block

Eighty-eight per cent of Australians say day-to-day expenses, rent or mortgage repayments, groceries and bills, are the most common roadblocks to paying down debt, according to new research by Experian, the global information services company. Experian research also showed 65 per cent of Australians incorrectly believe contributing to superannuation or saving money can have a positive impact on your credit score. Andy Sheehan, Managing Director of Credit Services at Experian said the figures not only highlight a knowledge gap when it comes to understanding credit worthiness but also the difficulty Australians face in paying down debt as the cost of living continues to rise1. “Australians are more reliant on credit now than ever before. The Australian Securities and investment Commission noted recently that the average Australian credit card debt in 2014 was more than 30 per cent higher than the year before,” he said. “We know that the most effective way to manage credit card debt is to pay it off in full each month however, we also know that many of us are aren’t able to manage our debt in this way2. Our research suggests that about 19 per cent of Australians pay only the minimum repayment on their credit card and five per cent of those people prefer to put extra cash in savings instead of paying down their debt. “How we manage debt has a major impact on our life. While saving is important, it’s also important to make paying down debt one of your priorities,” said Sheehan. Unsurprisingly, one in three Australians who participated in the survey (33 per cent) said they were nervous about their ability to access and manage credit and according to the research, their concerns are justified. Sheehan explained there is a significant lack of consumer understanding about the behaviours that impact creditworthiness, particularly when it comes to savings and superannuation. “Australians are too busy ‘getting by’ to worry about their creditworthiness. Our research shows that Australians are alarmingly misinformed when it comes to credit reports. In overseas markets, consumers are more empowered to take charge of their credit profile, actively manage their credit reputation and use it to get a better deal. In order for this to become the norm here, Australians need to be better informed and more proactive with their credit reputation,” said Sheehan. The new figures show we still have a long way to go. The research shows that only 23 per cent of Australians actually understand what a credit score is and how it is used by lenders to grant credit. Sheehan said comprehensive credit reporting was a step in the right direction as it will encourage people to become more aware of their positioning in the credit landscape. “Comprehensive credit reporting is good news for consumers. The negative credit reporting system doesn’t take good credit behaviour into account. Australians deserve to be recognised for good financial behaviour and this should be reflected in our credit report to enable better deals,” explained Sheehan. Additional findings from the research show: A further 19 per cent of Australians incorrectly believe that having multiple lines of credit open can positively impact their creditworthiness 40 per cent of Australians have up to three lines of credit available to them that they use infrequently 60 per cent of people said their bank is meeting or exceeding their expectations on providing information about their credit profile, compared to just 45 per cent in February 2014 People should also be aware that they can access their credit reports from Experian for free at any time. It is a good idea for them to do this to help prevent identity theft and confirm the accuracy of their credit history. Consumers looking to receive a copy of their free credit report and score can do so by visiting the Experian Credit Services website or for general service enquiries consumers may call Experian Credit Services on 1300 783 684.

Experian’s 34th annual Vision Conference is quickly approaching. This year’s theme of “Think Big: Data, Analytics, Insights, Growth” will be explored through more than 80 breakout sessions with thought-provoking perspectives, best practices and solutions for addressing emerging business issues for clients. Each year, Vision combines in-depth research, cutting-edge technology and expertise from industry leaders to help Experian’s clients strengthen their balance sheets and plan for sustained growth. To help you discover more about Vision 2015, here are a few previews of sessions at this year’s event: FCRA 623 reporting requirements—Are you meeting your obligations as a data furnisher? Learn how to test and sample your data to comply with the Fair Credit Reporting Act (FCRA). Understand the customer impacts of reporting and what it means to report accurate and complete consumer credit data. See a demonstration of Experian’s peer benchmarking tools and hear best practices. Insight into a rapidly evolving regulatory landscape for Commercial Lenders As the U.S. economy continues to strengthen, an increased regulatory burden is being placed upon small business lenders. Experian's Government Affairs team will discuss current regulatory trends taking shape in Washington, D.C., and throughout the United States. We will discuss the potential effect it may have on small-business lending, near term. Will EMV Save The World? We will discuss the anticipated rollout of EMV cards in the United States with an eye toward a shift in fraud loss rates and attacks. There will be a review of post-rollout dynamics in regions such as the United Kingdom to provide a bellwether for the United States. Vision 2015 will be held May 3—6 at the Gaylord National Resort in the Washington D.C. area. To register and learn more about Experian’s Vision 2015 Conference click here and follow us on Twitter at @ExperianVision and our LinkedIn Community.

A recent report by the Consumer Financial Protection Bureau (CFPB) found that many people are confused and frustrated about how to check credit reports and scores and they feel they lack information to take action to improve their credit histories. I have to admit that I was not surprised by some of the survey’s results, and I suspect my colleagues in financial literacy weren't either. We devote our careers to educating consumers, financial educators and businesses about how to empower people to understand credit and the role it plays in their everyday lives. But it's a steep uphill climb. As a new federal agency, the Consumer Financial Protection Bureau is a relative newcomer to the financial literacy arena, but many of the people working in its education division have years of knowledge and experience in the field. I've met and worked with a number of them, and I have great respect for the focus they are bringing to such an important issue. Many others — in the public sector like the Federal Trade Commission, and non-profits like the Mission Asset Fund and the Consumer Federation of America's America Saves, and companies like Experian — invest in, conduct and work together on programs with the sole focus of helping people become more financially capable. Together we can make a difference More than 220 million people have credit histories. We want to help every one of them gain the knowledge they need to make their credit reports and credit scores a powerful financial tool. Experian can’t do that alone. The good news is that there are many resources and education materials available for people. It takes all of us working together – private companies, non-profit organizations and the public sector – to get those resources into the hands of the people who need them. We each play a part as an individual consumer, as well. We all need to be actively engaged in seeking information and gaining knowledge. The key to success is simple; as a consumer you need to gain insights and then take action. Each consumer shares the same responsibility as organizations to play an active role in their financial journey and to make understanding their personal finances a priority. Organizations produce an abundance of tools and information and make it available through a wide range of sources. But they can’t force you to take it. In our digital age there is no excuse for not finding the information. All you have to do is enter “credit advice” in the search box. It does take effort to be financially well-rounded and successful. It takes time to invest, plan your retirement, manage your budget and understand your credit. But it is time well spent and you can do it! The challenge: turning insights into action Experian is committed to turning insights into action. That idea is at the core of everything we do. Over the last two decades, Experian has committed to being the consumer’s bureau and championing consumers to help them improve their credit. Almost 20 years ago we launched Ask Experian the industry’s first online credit advice column, and it’s still going strong. Now you can join our weekly #CreditChat and engage directly in conversation. Our company also awards financial literacy grants annually. Experian was one of the founding members of the JumpStart Coalition for Financial Literacy more than 20 years ago. Its primary purpose is to bring together leaders from the public sector, non-profits, private industry and academia to increase consumer financial knowledge — beginning in Kindergarten and continuing through adulthood. Through an Experian financial education grant, the JumpStart Coalition National Financial Educators Conference was launched six years ago. The first of its kind, high school teachers from across the U.S. attend the conference annually and take back what they learn to their districts, teaching fundamental personal finance skills to their students. Our company conducts research to spark innovation in products and services which ultimately help the consumer. Using data for good to spark change At Experian, we seek every opportunity to highlight how data could be used for good. So, to help get you motivated, Experian analysts compiled data to help clarify the traits of someone with outstanding credit as compared to those who could use a little TLC with their credit histories. I challenge you to gain insights that will help you take action and improve your financial capability. 1. Make good credit a habit for the long-term. The longer an account is open and active with an on-time payment history, the more it shows you are a good credit risk. 2. Keep your utilization rate low. To calculate your balance-to-limit ratio, divide the balance by the credit limit for that account. To calculate your total utilization compare your total balances to your total limits. A high utilization rate is a sign that you may be experiencing financial difficulty and is a strong indicator of lending risk. As a result, high utilization hurts credit scores and can cause lenders to be reluctant to extend additional credit. 3. Limit the number of inquiries. An inquiry is a record that your credit report was accessed in response to an application you submitted. Inquiries provide insight into your financial situation that the rest of the report may not. The primary reason inquiries influence credit scores is that they indicate you may have acquired new debt that does not yet appear on your report. Additionally, multiple applications within a short period of time may be a sign that you are having financial difficulties and are seeking credit to stay afloat, or to live beyond your means. Lenders want to be sure you are not in danger of over extending yourself before agreeing to extend additional credit. 4. Keep balances low on credit cards and other "revolving credit." High outstanding debt can affect a credit score. 5. Pay your bills on time. Delinquent payments and collections can have a major negative impact on a credit score. To help raise your credit IQ, visit our Ask Experian column, join our #creditchat or tweet us at @Experian_US to tell us how you are tackling our credit challenge!