From 2019, ANZ, NAB, Westpac and CBA have been subjected to mandatory comprehensive credit reporting (CCR).

CCR has been seen as a more “positive” reporting system than the “negative” credit reporting system that has previously been in place.

The result is an environment that is likely to support more responsible lending, competitive interest rates and financial products, and less unmanageable debt for all Australians.

Hold up. What exactly is comprehensive credit reporting ?

CCR will see the banks provide additional data to credit reporting bodies such as Experian, Illion and Equifax.  Under a comprehensive credit reporting system positive data is able to

be included on credit reports.

The data that they’re now required to supply to these agencies include:

– The type of loan or credit account.

– When it was opened or closed.

– The credit limit.

– When payments were made on time.

– And when payments were made more than 15 days late (not to mention the ones that are made 45 days late!).

So how does this help my situation?

In years gone by, the credit reporting bodies only heard about you when you had messed up.

Basically, this meant that banks, credit unions and lenders could only really assess your borrowing capacity on the negative aspects of your credit history. This included late payments or defaults.

However, now that CCR has been adopted by the major banks, your positive credit history, such as timely repayments, will be reported too.

This now gives your credit score the chance to go up – not just down.

Here’s the real kicker though

Three in five Australians are unaware their credit score may already have changed since banks started sharing positive customer data, so just by knowing the above information you’re already more informed than 60% of the population according to research by credit reporting agency Experian.

But the best bit is: positive credit reporting can help you obtain a loan for a home or business.

“From our experience in the 19 other countries where we operate credit bureaus, positive data sharing is a much fairer system and provides consumers with better credit opportunities,” says Experian Australia’s Poli Konstantinidis.

“It doesn’t just help those with strong credit scores, it also means those without a long credit history, young first home buyers for example, can build one quicker than before.”

So what can I do to improve my score?

Well, that’s simple. Make sure you’re paying all your bills on time!

• Pay your credit cards and loans on time as lenders may consider this when deciding whether or not to approve your credit application.
• Make sure you’re regularly checking your credit score – You can get a free credit report once a year from one of three national credit reporting bodies (CRB’s). You can find out how on this government website.
• Avoid multiple late payments – one late payment may result in a drastic drop in your credit score, but consecutive late payments or significantly late payments are the most damaging to your credit rating and could impede your ability to get credit in the future.
• CCR only shows your credit limit, not your actual amount owing so lenders will view this limit as your total amount of liability. Reducing this liability by doing things like closing any unnecessary and unused credit facilities/accounts, could increase your credit score.

If you want help with getting finance ready –  just talk to us.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.