CreditSmart reveals rise in credit usage amid economic uncertainty and growing credit health concerns

CreditSmart media release: Australians are increasingly concerned about their credit health, but remain unaware of credit reporting, according to the latest research from consumer education website, CreditSmart. The research also shows credit usage is up almost 10%, with eight in 10 Australians now having at least one credit product.

These findings come amid a rise in general uncertainty around personal finances and the economic outlook, with three quarters (78%) of Australians reporting a change in their personal finances, and almost half (47%) having reviewed their personal budget including one third of Australians who have cut down their spending on everyday basics over the last 12 months.

The research indicates signs of rising financial pressure among families (those with children under 18 at home), with 18% revealing an increased struggle to meet bill payments and commitments (up 5% on last year), and 12% saying they have used credit more.

CreditSmart’s annual YouGov survey analyses the credit habits, attitudes, and behaviours of everyday Australians.

One of the key findings was that attitudes toward credit remain positive (54% of Australians), with 30 % of Australians having checked their credit report. Still, 45% of Australians have never checked their credit report, which although still high, is an improvement over the previous 12 months (52%).

Of concern are the misconceptions about what is in a credit report. 22% of Australians incorrectly said rental history is included and 28% erroneously believe their annual income is reported. In addition, only 23% of Australians are aware that credit reports include a 24-month view of repayment history, showing whether you have made payments on time or not.

“The growing use of credit, coupled with greater concerns around personal finances, highlights the need for greater awareness around credit health,” said Geri Cremin, credit reporting expert and CreditSmart spokesperson. “While it is concerning to see confusion around the information that goes into a credit report, it is encouraging to see more Australians checking their credit report, and more Australians talking about money and seeking advice on improving their credit health.”

Continue to monitor risk

“Our research identified a growing number of Australians are taking on potentially risky credit, such as Buy Now Pay Later (BNPL). This trend is becoming more prominent amongst Millennials,” Ms Cremin said.

Almost half (49%) of Australians have used BNPL (5% increase on 12 months ago) and of those, one third (34%) have been late on BNPL repayments.

Millennials are more likely than other generations to have credit generally but also more likely to have BNPL (22% compared to Gen Z (12%), Gen X (13%) and Baby Boomers (8%)).

Getting advice on credit

“As more Australians report uncertainty in their personal finances and concerns around the future of their credit health, it’s more important than ever for Australians to monitor their credit health and seek assistance or support if required,” Ms Cremin said.

Among the findings, Ms Cremin noted consumers’ growing openness to seeking advice about their credit health, with 34% seeking help from banks, 30% from a financial advisor and 26% from family or friends.

“It is promising to see an increase in the number of Australians who have said they would seek advice on their credit health. It’s encouraging to see more Australians are having these kinds of conversations around the dinner table, particularly given the broader economic concerns we now face, and it is also great to see that more Australians are turning to professionals for assistance,” Ms Cremin said.

Some key research findings include:

45% of Australian have never checked their credit report (an improvement on 52% last year)
30% of Australians have checked their credit report in the last 12 months
One in ten (10%) Australians are worried about their credit health, with 7% saying they feel they are struggling to maintain their credit health, and 3% feel like they have lost control of
65% of Australians feel their credit health is under control and a further 16% feel their credit health is under control now, but are concerned about the future
Close to half (47%) say it is a struggle to meet their bills and credit commitments. Younger generations, and those with children under 18 and full-time workers are struggling the most
Eight in ten (80%) Australians have at least one credit product (up from 71% in Dec 2021), with the most common being credit card
Close to four in five (78%) Australians report a change in their personal finances in the last 12 months. Close to half (47%) say they have reviewed their personal budget or expenses and cut their spending on everyday basics, while over a third (36%) say they have not cut down on everyday expenses but have cut down on their discretionary spending like clothes
Moreover, a third (33%) say they are shopping around more/comparing prices while a quarter (24%) have started talking about money and personal finances with more friends and family
Almost half (49%) of Australians have used BNPL (5% increase on 12 months ago) especially Millennials, and those with children under 18 who live at home
Over a third of Australians have been late on their BNPL payments (34%)

Maintaining good credit health

“To maintain your credit health during the current uncertainty, we recommend four tips for consumers,” said Ms Cremin.

Firstly, know what’s on your credit report – that means check your credit report and understand the information on it; secondly make your monthly repayments on time; if you are struggling to keep up with repayments talk to you lender; and finally be conscious of other repayment obligations – including BNPL repayments.”