The number of borrowers who misrepresent their personal financial information when applying for credit is on the increase, according to Veda Advantage.
Recent research conducted by Galaxy Research for Veda Advantage estimates that 1.8 million – or 10% of Australians – have misrepresented their financial information when applying for credit, an increase of 200,000 on the estimates that were compiled only six months ago.
The most common form of misrepresentation was an understatment of total expenses, which Veda suggests 1 million credit applicants are guilty of. The research suggests a further 328,000 had overstated their income, while 427,000 had understated money owed on credit cards.
Veda Advantage head of consumer risk Angus Luffman said it is concerning that one in ten had misrepresented their situation, in light of continued financial vulnerability.
The latest Galaxy Research survey also found that one in five (21%) of Australians admit to finding it difficult to repay debt. Of these people, 28% are likely to apply for more credit in the next six months, and 14% of the respondents surveyed had missed a minimum bill repayment.
Luffman said the findings provide new evidence in support of the incoming positive credit reporting regime. “Combined with the rise in applicants falsifying their financial status, these figures reveal a concerning trend, and provide a call to action for Government to expedite the adoption of a comprehensive or positive reporting system,” he said.
Luffman hadded that on an international scale, Australia’s credit reporting system is lagging behind other economically developed countries, and that if lenders are expected to uphold NCCP requirements, they should be supported by new government legislation. “Australia needs to step-up in its response or we risk seeing more Australians succumb to debt pressure”, he said.