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Positive credit reporting and how it will benefit your credit score
January 9, 2018●
2 minute read●
In 2017, the Australian Government announced that come July 1, 2018; it will be introducing mandated comprehensive credit reporting (CCR) for all financial institutions throughout Australia.
What is comprehensive credit reporting, you ask? Well, basically, it is a new positive credit reporting system that will make it easier for financial lenders to make a balanced assessment of a borrower’s credit score and history.
In a nutshell, it refers to additional information being provided to and held by Credit Reporting Bodies in Australia. This includes positive information, rather than just the bad marks we’re used to.
The positive credit reporting system is not only beneficial for lenders but consumers as well.
CCR, or positive credit reporting, will make it easier for consumers with a negative credit score to apply for loans and credit cards. Until recently, most lenders and other financial institutions were only reporting the black marks on consumers’ credit files. This, of course, generally indicated that they were unreliable borrowers.
Financial institutions will be able to look past an applicant’s credit score and further into their financial background thanks to positive credit reporting. It basically means that all consumers will be more likely to be given the benefit of the doubt when it comes to their borrowing history.
As responsible lenders, it is not our aim to be declining customers. However, it is common practice for lenders to set stricter criteria for consumers with a negative credit score. Now, CCR will allow us to have access to more detailed information on the applicant’s history. We will be able to look at when a consumer has opened or closed a credit account. We can also see the type of credit they have applied for in the past and their repayment history for the last 24 months. Further, we’ll be able to report on positive information like clients paying off their loans on time.
This information will allow us to make more accurate assumptions on an applicant’s eligibility. We understand how easy it can be to miss a payment or make a couple of late ones. We don’t believe that this should hinder a person’s eligibility for seeking financial help in the future.
If you have a negative credit score but have been making a conscious effort to repair it, it will be easier for you to apply for a bad credit loan. On the other hand, you may be someone who only has a little bit of debt and a positive credit score but you have been failing to maintain regular payments. Lenders will also consider this when processing your application.
Over to you
Comprehensive credit reporting is a fairer system. It will allow for more accurate communication between lenders and financial institutions and their clients.
We would love to hear your opinions on what comprehensive credit reporting might mean for you, or answer any questions you might have. Head to our contact page if you’d like to speak to any of our friendly team members.
Are you looking for ways to repair your credit score? Jacaranda has you covered. Have a read of our article How To Improve Your Credit Score. We break down actionable steps you can take to get that number looking healthier.
Written by Jacaranda Team