Positive Credit Reporting, What Is It?
Since 1 July 2018, positive credit reporting has been a mandatory practice for all credit providers. But what exactly is it and why was it brought into practice in the first place?
So, positive credit reporting was brought in to allow lenders to better assess a borrower’s risk by providing a more comprehensive picture of their credit history. We all falter from time to time. However, a few missed payments here or there shouldn’t stand in the way of us being able to access finance when we need it. Yet if you’re still not sure what kind of impact positive credit reporting is going to have on you, here’s a quick rundown on everything you need to know!
Understanding Credit Reporting
Before we get into positive credit reporting, what is credit reporting in general and why are lenders required to do it? Basically, in Australia, lenders were previously required to record any negative credit events a person may accumulate over the years. This included any defaults or missed repayments.
The idea behind doing this was to give future creditors access to information on a potential customer’s financial history. So in most cases, banks, credit unions, and other lenders would base their assessments largely on any negative events listed on a person’s credit history.
Yet, negative marks can last for up to seven years on a credit report – and a lot can change in seven years! Enter: comprehensive credit reporting.
Comprehensive / Positive Credit Reporting (CCR)
Positive credit reporting, or CCR as it is sometimes known, is a more recent development within the credit rating system. So, if you are demonstrating good credit behaviour, your report will reflect this as well.
Your credit score will now reflect repayment histories such as your home loan or credit card repayments that were made on time, in advance, or even in larger payments than was necessary.
Your repayment history is stored for two years and only accessible by those who hold an Australian Credit Licence. Entity’s such as telephone or utility companies are not licensed providers. Licensed companies such as banks and private lenders are the only ones accessing this information when you apply for a loan.
How It Can Benefit You
Some benefits you could expect to see from positive credit reporting include:
- If you had a short history of credit, you could have more information on file about your credit-worthiness;
- Your credit score may no longer be significantly impacted by a single negative event. Especially once there are more positive ones listed;
- Your credit score is likely to be more accurate compared to what it was before.
How Can I Check My Credit Score For Free?
Fortunately, its relatively easy to check your credit score in Australia. There are a number of online providers that allow you to do a free credit score check, including:
- Creditsavvy (Experian score);
- Credit Simple (illion score);
- Finder (Experian score);
- Getcreditscore (Equifax score); and
- WisrCredit (Equifax and Experian score).
When applying for a loan, it is always a good idea to do a credit check online to ensure you’ve got a positive credit score. However, results can depend on what credit reporting agency they use. So, try using a few sites to give yourself a good idea of where you stand.
How Do I Get A Copy of My Credit Report?
If you want to view your full credit history report you need to apply for a report through one of the three main reporting companies: Experian, Equifax or Illion.
You can get a free instant online credit report Australia through one of these companies usually once a year. However, a free credit report will take 21 days to be posted. So if you want it instantly you will need to pay a fee for an instant download.
What Does Your Credit Score Mean?
So you’ve done your credit rating check, now what? Your credit rating is measured on a scale from 0 to 1200 and the higher your score, the better. Ultimately, the value of your score reflects the information in your credit report, including details like:
- Name, date of birth, living addresses and employment history;
- Monthly repayment history;
- Details of credit inquiries made;
- Court judgements;
- Consumer credit accounts (i.e. credit cards);
- Length of credit history.
As a rule of thumb, a score anywhere above 620 is considered to be a good history of borrowing. So, anything below that is bad.
What is A CR Code?
The CR code is a written code of practice about credit reporting in Australia. The system intends to increase the efficiency of Australia’s consumer credit market.
How Can I Improve My Credit Rating?
So, if you’re not too happy with your credit score, don’t despair! To ensure you make the most of positive credit reporting ensure you:
- Pay your bills on time; setting up direct deposits/debits is a good way to ensure this;
- Try not to switch credit lenders too often;
- Notify your lender of your new address;
- Research and only apply for credit when you need it.
Finance For People With Bad Credit
If you don’t have a positive credit rating then you could still potentially find finance elsewhere. Some lenders offer bad credit finance to people with poor credit histories.
If you’re unfamiliar with these terms – basically, an unsecured loan is where you can receive finance without having to offer any security. While a secured loan requires you to provide some kind of asset to secure your loan (i.e. a car or vehicle).
Therefore, either way, the borrower is required to sign a binding loan contract that sets out the exact terms and conditions of said bad credit finance.
Find Out More
Interested to learn more about positive credit reporting and credit checks? Jacaranda can give you the lowdown on everything from loans comparison to bad credit car loans. Alternatively, for more information on credit ratings, make sure you check out ASIC’s MoneySmart website for the latest.
Want to know how to improve your credit history? Jacaranda has 4 simple steps…
Need a same day cash loan? Jacaranda could be the lender you’ve been searching for!
Looking for bad credit finance? Jacaranda could lend a hand!
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