Five things you need to know about Comprehensive Credit Reporting (and how it may affect you)
Comprehensive Credit Reporting is a regime that helps lenders judge how well you can manage your borrowing commitments and make repayments. Let’s take a closer look at what the system is, how it works and the potential impact on credit scores.
1. Changes are happening in 2018
More data may soon be included in your credit report, but what exactly does this mean to your credit score and finances? As you may have heard, there was a change to credit reporting in Australia announced earlier this year. This means that the major banks will now be providing more information to credit bureaus about the accounts you hold with them, in the same way that a number of credit providers started to do over the past few years.
2. Your score may change
The availability of more data on your credit file means that your credit score may change. However, that’s not certain – as at the moment it’s only credit card accounts information from ANZ, CBA, Bankwest and Westpac being added to information held by credit reporting agencies such as illion (Credit Simple’s parent company). Credit Simple’s analysis of Australians who have NAB data on their files (which was added earlier this year) showed that 52 per cent of those people saw their credit score increase after the bank started contributing information. Meanwhile, 45 per cent of credit scores fell and 3 per cent remained unchanged.
3. There may be more credit information on your file
Thanks to CCR, you may start to see more credit information within your Credit Simple dashboard. This information may include the dates you opened and closed an account, the type of credit card account you hold, your credit limit, and your monthly repayment history. Log in and see what’s changed.
4. CCR could be a good thing for Aussies who pay their bills on time
CCR is a good move for consumers, as it may build a more robust and detailed picture of your credit habits – basically, whether or not you’re a good customer when you’re using credit. This new information being added may help to build a more thorough picture of how you handle credit and make payments, which may give credit providers a better idea of how much they should lend to you, and on what terms. CCR may help to build a more thorough picture of your credit information, which may make it easier for you to quickly build a credit file showing consistent repayment history, as well as possibly showing if you’ve recovered quickly after a negative event such as a default. CCR may help increase competition among the major lenders, so the consumer may win through better deals.
5. Our mates across the Tasman are already all over CCR
Everybody’s credit history is unique, so it’s impossible to know how the changes will impact you until CCR fully rolls out. In New Zealand, CCR was officially introduced in April 2012. Kiwis with positive reporting data included in their file have credit scores that are an average of 100 points higher than before. While CCR may not result in easier access to credit for everyone, the changes should bring greater transparency to lending decisions and may help people recover more quickly from adverse credit situations.