Changes to credit reporting…

  • WebAdmin
  • February 17, 2016

What you NEED to know! Is there a problem with ‘switching off’? Well possibly – especially if changes in the finance world that could affect YOU end up slipping under the radar!

So what upcoming changes do you NEED to know about?

It’s probably fair to say that EVERYBODY should know about changes to credit reporting. Why? Because credit reporting could affect EVERYBODY!

And yes, changes are coming…

From 1 July 2018 mandatory comprehensive credit reporting (CCR) comes into effect with the big 4 banks required to participate fully in the credit reporting system.

The mandatory credit reporting 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 repay a loan.

What is CCR?

CCR was introduced in 2014 – at that time Australia shifted from a negative reporting system to a positive reporting system. However, up until now it has not been mandatory for lenders to adhere to the CCR guidelines. That has NOW changed for the big 4 banks. What is the difference between the two systems?

Negative reporting system – recorded negative events in your credit history such as overdue debts, defaults, bankruptcy etc. Lenders based their assessment of your borrowing potential solely on this information. They could also access information on credit applications you have made but were unable to see whether those were approved or not.

Positive reporting system – this regime makes it easier for lenders to conduct a comprehensive and balanced assessment of your credit history. It now contains information on your repayment history for credit cards, home loans and personal loans including:
• whether you have made a payment or the minimum payment required
• whether the payment was made on time

It also contains information on your consumer credit liability including:
• type of credit account opened
• when it was opened and closed
• the name of the credit provider, and
• the current limit on the credit account

Your repayment history is stored on your credit file for up to two years.