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What is Comprehensive Credit Reporting, and how does it work?

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Over the past year there have been big changes made to how your credit history is reported. A new credit reporting system called Comprehensive Credit Reporting (CCR) has been introduced to provide a more thorough, well-rounded picture of a borrower’s credit history.

What is Comprehensive Credit Reporting?

In short it means that credit providers (lenders) are obligated to share more detailed information with credit reporting agencies.

The fundamental difference is that previously much of the data collected in credit files focused on negative information such as missed or late payments, but now lenders must also share positive information including repayments made on time. Only repayment history from Licenced Australian Credit providers can provide positive credit reporting.

For borrowers, this legislation aims to correct an imbalance and improve access to credit data so that lenders can better assess an individual’s creditworthiness and risk. Ultimately, this gives lenders a more accurate and fairer view of your ability to repay your debts.

So now, if you were to apply for a loan, the lender will likely have a lot more information and data to assess you on.

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When is CCR coming into effect?

The major big four banks (CBA, ANZ, Westpac, and NAB) are all required to share this data from 01 July 2019.

Which lenders are taking part in CCR?

Although only ANZ, CBA, NAB and Westpac are required to share the data, it’s likely other lenders will also do the same. Lenders that have already opted to provide CCR information include:

  • AMP
  • Australian Military Bank
  • Bank of Melbourne
  • BankSA
  • Bankwest
  • Bendigo Bank
  • Bluebay Home Loans
  • Citibank
  • Connective Home Loans
  • CUA
  • HSBC Australia
  • ME Bank
  • MyState Bank
  • Newcastle Permanent
  • Pepper Money
  • RAMS
  • St. George Bank
  • Teachers Mutual Bank
  • The Rock

What do lenders report to credit bureaus?

Lenders and credit providers will now have more information about a customer’s:

  • Repayment history for credit accounts such as credit cards, home loans and personal loans; and
  • Whether the repayment (or minimum payment) was made in full and on time.

This information is stored on the individual’s credit file for two years and listed under “Consumer Accounts” on the credit file.

It will give lenders an expanded view on the customer’s situation, as below:

Credit informationBefore CCRAfter CCR
Credit inquiry informationYesYes
Credit type applied forNoYes
Credit amount applied forNoYes
Date opened - credit accountNoYes
Credit account type - openNoYes
Date closed - credit accountNoYes
Maximum credit amount available for each accountNoYes
New and previous credit amountsNoYes
Conditions related to repaymentsNoYes
Credit provider names and licence detailsYesYes
Overdue consumer credit account detailsYesYes
Monthly repayments for the last two yearsNoYes
Default agreement detailsNoYes
Commercial credit applicationsYesYes
Overdue commercial credit account detailsYesYes

How do I get a Comprehensive Credit Report?

As this is a new change, it may take time for information to become readily available to you and lenders. The best thing you can do is keep up to date with your credit report. You can access your credit report and score for free once per year through these credit reporting agencies:

If you end up getting a report from each agency, you may notice slight differences but this is usually not something to worry about. However, checking your credit report (from 1 or multiple sources) can also be your chance to point out any incorrect information and update personal details such as your address, employment and contact details.

ASIC’s Moneysmart have a good guide for checking that your credit report is accurate and the common mistakes made by both the creditor and the credit reporting agency.

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How often do lenders report information to credit agencies?

man-paying-bills-credit-card

Thanks to the new CCR system, your credit report can be updated monthly. The information it is updated with includes whether or not you have made repayments for a credit product (e.g. a loan or credit card) on time. If you decide to apply for another loan or credit product, that will be reported along with any other changes (e.g. opening or closing a credit account).

What are the potential benefits of CCR?

The introduction of CCR could provide buyers with a few benefits. Buyers that have shorter credit histories will benefit from the change as their credit report will now include positive information such as on-time repayments. This can make it easier for first home buyers to apply for a home loan.

Some buyers may experience a growth in their credit score as it will now account for both positive and negative activity. This can reduce the amount of ‘high risk’ buyers in the market, allowing them to access more credit.

Credit scores will also require more negative activity to be affected. As credit scores would only account for negative activity in the past, it was easy for an isolated event of a missed repayment to affect a buyers credit score. With positive activity contributing to the score, the gravity of negative activity is reduced.

Accounting for positive activity could also be beneficial for lenders as they are able to access additional information on buyers. This can help lenders follow through with responsible lending as they have a better idea of who will be able to stay on top of repayments.

Lenders will also be able to identify whether a buyer has placed themselves in a tight situation as they can review whether the buyer has a history of positive activity. A buyer that has missed recent repayments but has a history of positive activity may be able to talk to their lender about their situation.

How long does negative information remain on a credit report?

Most negative information, such as a default, will stay on your credit report for a period of 5 years. This means that if you have had an overdue account in the past 5 years, this will be visible on your credit report. A clearout, however, remains on your report for 7 years. A clearout is when your lender is unable to contact you when they have made sufficient efforts to.

General data on your repayment history information only stays on your report for 2 years. Any credit enquiries, court judgments and summons will remain on the report for 5 years.

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Will my credit score change?

Yes, your credit score may change. The great thing about CCR is that even if you have defaulted on a credit repayment in the past 5 years, you may still be able to access credit because now lenders will be able to see the positive elements of your good credit history.

So the good news is that if you’ve been making regular, on time payments towards a personal loan or your credit card, for example, lenders may take this into consideration when assessing your home loan application.

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

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Tags: home loan, credit score, credit report, credit guide, credit, first home buyer, new purchase, refinance

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