#If you are thinking of borrowing money from a bank, you must know that there have been some recent changes in Australia with regards to credit reporting and how the loans are being dispersed. Read below for more details on this.
What is a Comprehensive Credit Reporting (CCR)?
The Comprehensive Credit Reporting (CCR)or positive credit reporting is a new reporting system for credit since 1st July 2018 and is intended for allowing the lenders to assess risk in a better manner by taking a comprehensive as well as a balanced assessment of the history of applicants’ credits. This can potentially help borrowers who may have slipped a couple of payments for their loans but have a strong means to pay current payments.
The comprehensive credit report will include all the information about the borrower’s current accounts, opened and closed accounts, the date when default notices were paid, and if we had made the repayments or not.
How is Comprehensive Credit Reporting (CCR) different from Negative Credit Reporting?
As compared to Comprehensive Credit Reporting (CCR), the Negative credit reporting system in Australia was under operation till March 2014 and was based only on events that were connected with negative credits for the clients.
This meant that the lenders mainly based their assessments of a potential borrower if the applicant had any records of negative reports in their credit history. These could include any sort of defaults, overdue debts, repayments, bankruptcy, or even court judgments. They could only access any information concerning the potential customer’s credit application and not if our application had been approved or not.
How Comprehensive Credit reporting impacts on applying for a home loan or refinancing
- Any positive behavior recently committed will be registered such as if the borrower has made all the payments during last year. This will help us balance out a few of our previous negative slip-ups such as if we had missed a couple of payments some years ago.
- Those of us who had a smaller credit file with a limited history of our credit would now be able to show more information about our credit-worthiness, making it easy for us to get credits from banks.
- Now with the introduction of the comprehensive credit reporting system, we will not be impacted significantly if we miss a payment. In fact only if we have missed our payments on a regular basis will our credit report listing impact our credit rating.
- Our credit score with the introduction of the comprehensive credit reporting system has become more accurate as well as comprehensive as compared to negative reporting credit scores.
- Lenders can now see 24 months of account conduct history of the borrower including any defaulted or late repayments along with the date when the payments were made for the default amounts.
How Credit Reporting and Credit scores impact the consumer car and personal loans
If you wish to apply for a car or personal loan, the lenders will get an extensive picture of our complete credit history. This means that if we have been making all your payments on-time, we can easily secure a better interest rate for these loans.
Hence, if we wish to source better rates of interest, it is important for us to control our payments and keep good account conduct by being on time with your payments for any of our loans and liabilities. This will be useful for us in the long run as we never know when we need financial assistance.
Please note that as your financial consultants, we will guide you on how to keep your payments going on a regular basis on maintaining a clean credit history. Take the time to book a chat with our team at Greater Finance.