Credit Reports Australia – are Debt Stressed Aussies Getting the Protection They Need?

Surging numbers of Australians defaulting on their credit agreements has led two of Australia’s credit checking firms to call for major credit reporting reforms to tackle the nation’s growing debt problem.

Two recent studies conducted by credit reference agencies, Veda Advantage and Dun and Bradstreet have shown alarming increases in the number of people failing to repay the credit they owe.

The study by Veda Advantage, Australia’s largest credit ratings business with information on 13 million Aussies, has shown that in parts of Australia the numbers of people defaulting has risen by more than 50 per cent.

Areas with high levels of mortgaged home owners saw rises of 42%, as hard pressed families struggle to cope with interest rate rises. Capital city areas, while seeing fewer defaults, still saw hikes in defaulters by nearly a third.

A spokesman for Veda Advantage said the survey had highlighted regional hotspots of consumers struggling to repay what they owe to lenders.

“This study is significant as it demonstrates that people living in regional Australia as well as those in mortgage belt suburbs are struggling over other areas to repay the credit they owe.

“The drought and other environmental hardships, as well as rising interest rates may have paid their toll as country families seem to be suffering more than their city cousins.

“We are also concerned about the rise in defaults in mortgage belt suburbs as some families purchasing their own houses are also struggling to repay money,” she added.

Veda Advantage have said the study reinforces the need for decisive action to reform credit reporting laws to protect borrowers and lenders, especially in light of growing concerns about interest rates and the cost of living.

A separate study conducted by Dun and Bradstreet has shown that young Aussies are the most likely to get a call from a lender’s collections department. More than half of debtors are under the age of 35, according to the Dun and Bradstreet study.

Other key findings show many consumers are defaulting on low value debts of less than $500, with men more likely to suffer re-payment problems than women. Victorians are the most likely to have a debt referred to debt collectors.

A Dun and Bradstreet spokesman echoed the view of Veda Advantage that credit reporting reforms were needed to help with better lending decisions.

She added: “Consumers need to think carefully about the levels of debt they are taking on. However with years of reports about ever increasing debt stress we have to accept that our current credit reporting laws aren’t working and we need to make changes. Those changes must include improved credit reporting laws.”

Victorians and New South Welshmen and women top the league table for debts referred to collectors, at an average of $3,000, according to the credit report supplier. Victorians account for 40 per cent of the debt referred to collectors. Men are incurring debts of $600 more than women and account for 52 per cent of debt passed to debt collectors.

While young Aussies under 35-years-of-age account for one third of debt sent to collectors, debtors between the ages of 35-44 have the highest average default debt of about $6,000.