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In the past, you may not have thought twice if you missed a repayment deadline. But from March 2014, something as simple as a late or missed repayment could affect your chances of obtaining credit.

In the past, you may not have thought twice if you missed a phone bill or credit card repayment deadline.

However, due to changes to the Australian Privacy Laws, something as simple as a late or missed repayment on a personal loan or credit card could affect your chances of obtaining credit.

The new credit reporting system came into effect on March 12, 2014 and has a purpose of providing lenders with more information. Before these changes were implemented, Australia operated under a negative credit reporting system, so lenders could only see defaults and credit applications. However, under the new ‘positive’ system, lenders have access to the past 24 months of a borrower’s repayment history.

So, although this may be great news for those who are diligent with their repayments, it will require extra effort from those who aren’t as attentive. These changes give lenders a better insight into a borrower’s ability to repay their debt and if your credit history shows you regularly don’t meet repayment due dates, it may prevent you from getting a competitive home loan or even being approved at all.

However, even if your repayment history isn’t perfect, there is still time to turn your situation around.

Tips to help keep your repayment history clean

Pay off all outstanding debts: Before applying for a home loan, you should try and put yourself in the best financial position that you can. This means paying off any outstanding bills and repayments. Although a lender does not like to see a default on your credit report, it is much better to have a paid default rather than an unpaid default.

Make all repayments on time: This is the most important step to maintain a strong repayment history. Therefore, do whatever you need to do to remind yourself – reminders on the calendar, phone or computer. Direct debit transfers are a great option for ongoing bills that has an identical amount.

Don’t take on more than you can afford: People can get into serious financial strife if they take on more debt than they can handle. It is especially important to pay attention to interest free and deferred repayment deals. Even though you may be able to afford repayments now, what will happen when the interest free period ends?