Changing credit for the better - Supporting people with knowledge and simpler processes for a safer, fairer future - Michael Blyth and Richard McMahon, ARCA

In today's uncertain financial environment, an increasing number of Australians are experiencing significant financial difficulties, often spurred by rising living costs and soaring interest rates. As service providers, it is our responsibility to equip ourselves and our customers with the knowledge and tools necessary to effectively face these challenges.

The Growing Challenge

Research conducted by CreditSmart, the Australian Retail Credit Association's (ARCA) consumer education website, has revealed that 50% of individuals have encountered financial stress within the past year, with 66% attributing it to the escalating cost of living. For 53% of Australians, housing costs have surged in the last six months, and 57% of people with loans have reached out to their lenders for assistance in the past 18 months.

The research also highlights a growing reliance on various forms of credit and non-traditional financial options (such as Buy Now Pay Later arrangements or payday loans). Such reliance can lead to a general sense of anxiety regarding credit health, and we know that supporting people and facilitating responsible borrowing practices is pivotal for financial stability and reducing further financial strain.

Arming people with the knowledge to reach out for help through CreditSmart

A financial hardship arrangement is a mutual agreement between a customer and their lender, designed to adjust their loan repayment obligations to deal with circumstances that hamper the customer's ability to make regular payments.

The importance of seeking help early cannot be overstated but a common concern among people seeking financial hardship assistance is its potential impact on their credit score and future credit applications. People need to have all the correct information so that they can make the right decisions for themselves.

For example, a financial hardship arrangement won’t impact someone’s credit score, however it will appear on their credit report for one year. During this time, banks or lenders may ask a few questions to understand whether you are still experiencing hardship when applying for a new loan or credit.

It is important to ensure people are aware that while missed payments will impact credit scores, hardship arrangements do not. In doing so, we aim to reduce barriers to assistance and encourage people to access support when needed.

It is important to ensure people are aware that while missed payments will impact credit scores, hardship arrangements do not. In doing so, we aim to reduce barriers to assistance and encourage people to access support when needed.

As the providers of essential services, we need to ensure information is easy to access and understand. We can all play a role in equipping our communities with information that supports them to make confident decisions.

ARCA’s consumer education website, provides in-depth information and resources into credit reporting and managing financial hardship, which we hope can assist in this endeavour.

Supporting changes to credit reporting

ARCA is currently consulting on changes to the Credit Reporting Code that, if implemented, would make it easier for people to correct errors on their credit report – including for victims of identity theft and victim-survivors of domestic abuse.

Right now, it’s possible for people to correct their credit report if the information on it is inaccurate, out of date, or misleading, or, in some cases, where there was a situation entirely outside their control. The proposed changes seek to broaden the scope of some corrections options and improve processes for more people – including people experiencing family violence. ARCA supports the proposed changes that seek to rectify this including:

  • Simpler processes for correcting multiple pieces of information stemming from a single event: This will mean people won’t need to repeat their story when correcting information that is inaccurate, out of date, incomplete, irrelevant or misleading.
  • Making it easier to correct information  that only exists because of ‘reasons beyond the person’s control’: This includes explicitly citing domestic abuse as an example of a circumstance beyond someone’s control, allowing consumers to make these requests directly to their lender and encouraging lenders to remove records of missed payments that occurred as a consequence of this experience.

The changes are described in more detail on ARCA’s website, which also includes information the other proposed changes to Credit Reporting Code.

While ARCA support these changes, we are still eager for feedback, including about the effect that these changes would have for service providers and the people they serve. Feedback is due by 16 November – please get in touch with us at if you’d like to learn more or provide feedback.


Written by:
Michael Blyth, General Manager - Policy and Advocacy
Richard McMahon, General Manager -  Government & Regulatory

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