Financial Abuse Follows People Into Their Credit File. Correcting It Is Free.

Arca, the peak body for Australia's credit reporting industry, has published best practice principles for handling credit files damaged by domestic abuse. It is the first time the industry has written down a consistent answer to a question asked one lender at a time for years.

Financial abuse leaves a paper trail. Loans taken out in someone's name without their knowledge. Defaults on accounts they never opened. Credit enquiries they knew nothing about. One in four women and one in 14 men have experienced intimate partner violence, according to the ABS 2023 Personal Safety Survey, and financial abuse is among the most common forms it takes.

The Principles of Best Practice: Domestic Abuse and Credit cover five areas: accurate credit reporting, accessible services, staff capability, safety by design, and continuous improvement. The idea underneath all five fits in a sentence. A credit report should describe a person's creditworthiness, not their abuse.

The credit file is the part that lasts

The reason this matters is timing. A default stays on an Australian credit file for five years. Repayment history sits there for two. Someone who leaves an unsafe relationship at 30 can still be explaining an account they never opened when they apply for a car loan at 34.

Arca chief executive Elsa Markula put the pattern this way: "For too many victim-survivors, that control doesn't end. It continues to show up in their credit report."

Until now, how a lender or a credit reporting body handled these requests varied from one organisation to the next. Same facts, different answer.

The gap between a principle and a rule

These are principles, not law. Any credit provider or credit reporting body can pick them up, but nothing compels one to. Catherine Fitzpatrick of Flequity Ventures, which helped found the Financial Safety Alliance in January, said consistent adoption across the industry "would be a significant step towards ensuring financial abuse does not remain a lifelong financial penalty". Would be.

The direction is at least consistent. In the same week, the independent review of the Customer Owned Banking Code of Practice recommended banning adverse credit reporting for abuse-related debts across the mutual sector, which covers 5.4 million customers at 46 of Australia's 48 customer-owned banks.

What to do

The rights that matter already exist, and they do not wait on adoption. Start by getting all three reports. Equifax, Experian and illion each hold a separate file, and under the Privacy Act each has to give you a free copy every three months. An entry often sits on one and not the others. A credit score tells you far less than the file itself.

Then write the correction request. Send it to the lender or to a credit reporting body: under the no wrong door rule, whoever you contact has to consult the others. It costs nothing. Name the account, the date and the entry, say plainly that the debt arose from family violence and that you did not consent, and ask for written confirmation. If they accept the entry is wrong they have 30 days to correct it. If they refuse, they have to write to you with reasons and tell you how to escalate.

Escalation is where most people stop, and it is the part that works. AFCA is free, its decisions bind the lender, and it has found it unfair to leave a default listed where family violence put the circumstances beyond the person's control. Complaints about a credit reporting body's handling go to the OAIC. A financial counsellor will do all of it with you for free, through the National Debt Helpline on 1800 007 007. If there is any risk in the other party learning where you are, raise safety with the lender first, because a correction process can generate contact.

For anyone on the lending side, the change is small: knowing the correction path exists, and saying so early, before a customer quietly decides not to apply. Clearing an entry does not decide an application on its own, and any finance remains subject to lender approval, terms and conditions apply.

If you or someone you know is experiencing domestic or family violence, 1800RESPECT is available 24 hours a day on 1800 737 732.

This article is general information only and is not financial advice.