Wednesday 7 October 2026: More than one in four Australians have avoided applying for a financial product because they feared it would damage their credit score, raising concerns that outdated credit-reporting rules are discouraging consumers from finding better deals when household budgets are already under pressure.
New research commissioned by CreditSmart, a consumer education platform owned, developed, and managed by Arca, reveals that 41 per cent of Millennials, 37 per cent of Gen Z and 34 per cent of households earning less than $100,000 have avoided applying for a financial product because they were worried about their credit score.
In response, a coalition of credit providers and consumer advocates led by Arca is calling on the Federal Government to modernise a system that has failed to keep pace with how Australians borrow.
Arca CEO Elsa Markula said the current credit reporting rules were increasingly difficult to defend.
“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.”
Australia is falling behind comparable credit markets overseas. ClearScore CEO Justin Basini said: “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.”
“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.”
For this reason, Arca says the single biggest fix is adding more data to Australian credit reports, including the amounts people actually owe and have repaid. The industry association is also calling for the introduction of ‘soft enquiries’, which would allow consumers to compare credit products without affecting their score.
The jointly supported reform package also includes stronger identity-fraud protections, lifting the threshold for listing defaults from $150 to at least $300, improving correction processes, closing gaps in comprehensive credit reporting, and tightening regulation of credit repair firms. 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 is urging the Federal Government to act now and progress the package in full, including the targeted amendments to the Privacy Act and National Consumer Credit Protection Act required to unlock the broader reforms.
“When consumer advocates and the credit industry are both asking for the same changes, Government should treat that as a mandate to act,” said Ms Markula.
Australia has modernised credit reporting before. Comprehensive Credit Reporting was introduced in 2014 following major legislative reform, with Arca helping develop the rules and data standards needed to make the new system work.
But Arca says the market has once again moved faster than 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,” Ms Markula said.
About us:
About Arca:
Arca is the only industry association dedicated solely to consumer credit. The organisation brings together Australia’s leading credit providers and reporting bodies to improve data protection and make credit more visible, accessible, and easily understood. Through advocacy, governance, education, and engagement, Arca shapes best practices and ensures Australia’s credit system is robust, respected and trusted.
Arca’s mission is to enhance the availability of credit through responsible and efficient credit management policies and practices, making credit work for all Australians. Arca’s members include 14 of Australia’s largest banks, mutual banks, consumer finance companies, fintechs, and credit reporting bodies, accounting for 95% of all consumer lending in Australia.
About Elsa Markula, CEO of Arca:
Elsa Markula is the CEO of Arca, the only industry association of its kind dedicated to making credit work for all Australians. Since joining Arca in 2013, she has played a pivotal role in drafting industry codes and standards that improve data protection and make credit more visible, accessible, and easily understood. Previously, she worked at the Financial Ombudsman Service and in private practice as a legal practitioner.
Contact details:
Allie Cracknell, Pure Public Relations
0415 294 910