There are a number of credit reporting agencies which provide fee based credit reporting services to consumers. The agencies including Equifax, CheckYourCredit and Experian Credit Report are services often used by lenders as part of a loan approval process. The information contained in credit reports can significantly affect the position of consumers.
The Privacy Act 1988 provides that consumers are entitled to access their credit reporting information for free once a year, or if they have applied for, and been refused credit within the past 90 days, or where the request for access relates to a decision by a credit reporting body or a credit provider to correct information included in the credit report.
An issue that often arises for parties to legal proceedings is the recording of Court judgments. A Court judgment can be made by a Court making a decision following a contested hearing or alternatively a judgment by consent. If the Court judgment is a matter of public record a credit reporting provider can source the information from public records to record on personal credit files. Often information contained on the public record is not complete, or does not represent the entirety of the circumstances.
A Court judgment that is unpaid will remain on a credit report for a period of 5 years. A Court judgment that has been paid will remain on the credit report for 2 years. If the Court judgment is recorded on the credit report, the responsibility is on the affected party to take steps to provide sufficient information to a potential lender or other interested party to prove that the debt has been repaid.
The credit reporting provider retains the decision as to how matters are recorded. The ACCC reports that Equifax is the largest credit reporting agency, holding an estimate of 85% market share in the consumer credit reporting marketing. Equifax’s practice is to add a notation to the credit report stating that a debt has been repaid. The judgment debt itself is not removed from the credit file and will remain visible to any party obtaining access to the credit file, usually lenders deciding whether to approve a loan.
Often the only circumstances in which a judgment debt will be removed from a credit report is if the judgment is set aside, either by consent or an application to the Court. It is often difficult to get the judgment creditor to agree to set aside a judgment by consent, and the Court will only set aside a default judgment in certain circumstances. The fact that a debtor has paid the judgment debt, is not a ground to set aside a judgment.
The reality therefore in most situations is that a judgment debt remains recorded on a credit file. This should be a factor that is considered by all parties in Court proceedings.
The ACCC monitors fee based credit reporting agencies. In 2018 the ACCC commenced Federal Court proceedings against Equifax for misleading and deceptive conduct and unconscionable conduct in relation to credit report services.
Equifax admitted it breached the Australian Consumer Law in 2016 and 2017, when its representatives made false or misleading representations to consumers during phone calls. Equifax told consumers that its paid credit reports were more comprehensive than the free reports it had to provide under the law, when in fact they contained the same information. Equifax also admitted it told customers they would be charged a single one-off payment, but failed to disclose that payments for its paid credit report packages would automatically renew unless consumers opted out.
The Federal Court ordered that Equifax pay penalties totalling $3.5 million; Australian Competition and Consumer Commission v Equifax Australia Information Services & Solutions Pty Ltd [2018] FCA 1637.
