It’s officially July! You know what that means. Chilly weather, faux Christmas parties, and you guessed it, Comprehensive Credit Reporting. Okay, you might not be as excited about the latter as we are — but it’s worth being across since your finances are about to be impacted.
What is Comprehensive Credit Reporting (CCR)?
Comprehensive Credit Reporting (CCR) — also known as Positive Credit Reporting — means that banks and lenders can now see more data in your credit report when deciding whether or not you’re able to repay a loan or other lines of credit.
That sounds a little bit scary, but it’s actually a pretty good thing.
Up until 2014, lenders had limited access to your credit history. They could only see whether you had any negative information (ie. credit enquiries, overdue debts, defaults, bankruptcy etc) on your credit report. This focus on negative actions made it harder for people with good credit to be seen as trustworthy borrowers since lenders only had access to limited information.
Now, positive aspects of your credit report are being added—hence the name Positive Credit Reporting—to give banks and other lenders a bigger picture of your finances.
With CCR coming into effect, the newest additions to your credit report include:
The types of credit you’ve opened in the past five years
Up to 24 months of repayment history
Dates credit accounts were opened and closed
The credit limits for credit cards and values of loans obtained
Still with us?
The benefit of lenders having a deeper understanding of your credit history means that they can make more informed decisions about your overall financial position. Having more certainty around your ability to pay back a loan could result in lower interest rates and better financial products.
CCR also allows borrowers with a strong repayment track record to gain better recognition from lenders based on their good behaviour.
So… is CCR officially in effect?
Technically, CCR has been in place since 2014, but only recently became mandatory for Australia’s Big Four banks, who were required to share at least 50% of their data within 90 days of 1 July 2018. They now need to share 100% of their data within 90 days following 1 July 2019. This is part of a bigger push towards open banking in Australia, and Comprehensive Credit Reporting is just the first step.
See the picture above on what the government had to say:
According to the Federal Government, “this measure will give lenders access to a deeper, richer set of data enabling them to better assess a borrower’s true credit position and their ability to pay a loan.”
Is CCR a good thing for everyone?
Although CCR brings many benefits, it’s not sunshine and rainbows for everyone. There is a chance that with CCR in full effect it could have a negative impact on your current credit scores, especially if repayments have not been made on time. The best way to find out is to check your credit scores across the different Credit Reporting Bureaus. And with WisrCredit, you can get your Equifax and Experian score in the one place. Go to WisrCredit here.
How Comprehensive Credit Reporting may affect your credit scores
With more visibility into your repayment history and credit obtained, it’s more important than ever to maintain good financial habits. With great power comes great responsibility, right?
Here are a few best practices to keep in mind:
1. Pay your bills on time.
Automate, automate, automate!
2. Don’t apply for credit that you know you can’t get.
Check your credit score on a frequent basis so you understand your borrowing power and can start to see what is impacting your score – either positively or negatively.
3. Keep your debt under control.
We have an app for that.
…and that’s CCR in a nutshell. Good on you for getting this far! Keep an eye out for mentions of open banking in the news since this is only the beginning.