An industry and consumer alliance is calling for major changes to the credit reporting system as new research exposes barriers to competition.
Arca, the credit reporting industry association, is leading a coalition of credit providers and consumer advocates urging the federal government to overhaul Australia’s reporting framework, warning that credit-score fears are deterring consumers from pursuing better deals.
The call follows CreditSmart-commissioned research that found more than one in four Australians had avoided applying for a financial product because they feared damaging their credit score.
The proportion reached 41 per cent among Millennials, 37 per cent among Gen Z, and 34 per cent among households earning less than $100,000.
Arca CEO Elsa Markula said the framework risked undermining the comparison-shopping consumers were encouraged to undertake.
“We tell Australians to shop around, compare their options and look for a better deal, but our credit reporting system can make people afraid to do exactly that,” she said.
“When household budgets are already stretched, we should be removing barriers to competition, not creating them,” Markula said.
Learning from overseas
ClearScore CEO Justin Basini pointed to Britain’s approach to eligibility checks as an example of how Australia could make product comparisons less daunting.
“Australia still has significant room to modernise. Soft-search eligibility checks are standard in the UK, making it far easier for people to explore and compare suitable products without fear of harming their credit profile,” Basini said
He added that the information available overseas also supported more tailored lending assessments.
“The UK market also benefits from richer data and a more rounded picture of consumer behaviour. That gap means Australian lenders and consumers are both missing out on better-informed, more personalised credit decisions,” he said.
Arca’s priority is expanding reports to capture amounts owed and repaid, with the association also pushing for soft inquiries, which allow product comparisons without affecting credit scores.
Beyond those changes, the coalition has proposed stronger identity-fraud safeguards, increasing the default-listing threshold from $150 to at least $300, better correction procedures, addressing gaps in comprehensive credit reporting and tougher regulation of credit repair business.
The association said the measures would deliver benefits extending beyond individual applications.
“Together, the package of changes would lift productivity, cut red tape, and give Australians safer, more efficient access to credit when they need it,” Arca said.
Pressure for government action
The campaign follows an independent review of Australia’s credit reporting framework, completed by Heidi Richards, who delivered the final report in September 2024.
Markula argued that agreement between consumer representatives and credit providers strengthened the case for government intervention.
“When consumer advocates and the credit industry are both asking for the same changes, government should treat that as a mandate to act,” Markula said.
She also noted the introduction of comprehensive credit reporting in 2014 following legislative reform, arguing that Australia had demonstrated its capacity to modernise before, with the association adding that borrowing practices had again outpaced the framework.
“A fair credit system should reflect someone’s real financial position, not exaggerate the significance of a minor debt, penalise them for shopping around, or allow outdated information to shape their financial future,” Markula said.
[Related: Peak credit body urges system overhaul after Westpac court case]
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