People with poor credit records could pay higher rates of interest when taking out a new mortgage than those with good records, under new reporting standards.
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Credit worthiness will be boiled down to a single number under the changes this week, allowing credit agencies to start collecting much more data on the estimated 16 million Australians using credit.
Banks could follow the lead of US financial institutions, who often use the score alongside income, financial commitments, employment history and the size of the deposit in assessing applicants.
Up until now the reports, which credit agencies provide to lenders when they check on applicants, hold only negative information, such as missed payments of more than 60 days and bankruptcies.
Under the new regime, monthly payment histories on loans and credit cards will be shown and a black mark will go onto reports for missed payments of more than five days.
The change brings Australia into line with most other developed countries. All credit agencies in Australia will eventually provide individual credit scores.
Credit agency Veda introduced credit scores in October. Veda executive general manager David Grafton said the average VedaScore was 749 out of 1200.
He says a VedaScore of 200 means the person has a 50 per cent chance of having an "adverse credit event" within the next 12 months.
Steve Brown, director of consumer credit at credit agency Dun & Bradstreet, said the inclusion of repayment history on credit reports could help people with poor credit histories show lenders they had changed their ways.
