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More carrot, less stick: Comprehensive Credit Reporting

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Many people only pay their bills on time to avoid being slugged with late fees and a bad credit rating. But a big change this month means that you can now be rewarded for timely repayments.
From mid-September, ANZ, NAB, Westpac and CBA all agreed to commence Comprehensive Credit Reporting (CCR).
It’s seen as a more “positive” reporting system than the “negative” credit reporting system that has previously been in place.
CCR was introduced back in July but it’s just taken a while for the big four banks to get onboard.

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.
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 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.
If you’ve missed any payments, you should read up on our discussion around what happens if you miss your payments.
However, now that Comprehensive Credit Reporting 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

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’s my next step?

Well, that’s simple. Make sure you’re paying all your bills on time!
“This isn’t about the value of the car you drive or how big your recent pay rise was,” says Konstantinidis.
“Pay credit cards and loans on time, as lenders may now consider this when deciding whether or not to approve your credit application.”
You’ll also want to check your current 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 or by requesting a copy of your credit report from one of the national CRBs:

CRB Website Phone
Equifax (formerly Veda) MyCreditFile.com.au 1300 762 207
D&B D&B CheckYourCredit 1300 734 806
Experian Experian Credit Services 1300 783 684

You can get a copy of your credit report for free from a CRB in all of the following circumstances:

  • if you have applied for, and been refused credit, within the past 90 days
  • where your request for access relates to a decision by a CRB or a credit provider to correct information included in your credit report, and
  • once a year (not counting the above circumstances).

If you need a hand doing so – or you discover that you have a poor rating and want help improving it – then get in touch.

We’d be more than happy to help out.

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.

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