It was big news this month when Treasurer Scott Morrison announced the federal government will be mandating comprehensive (or positive) credit reporting (CCR) by the middle of 2018.

This means that the big banks will have to ensure that at least 50% of their positive consumer credit data is “ready for reporting” by the 1st of July. They will then be required to have all of it ready a year later.

The backstory for this announcement is that while the Privacy Act was amended to allow for this positive reporting back in 2014, participation by credit providers has been voluntary and so far, the take up has been very limited, and so now the government has acted.

The extra information that will now be included on your credit file includes information on your repayment history, credit limits of your open and closed accounts, the type of credit account, and the open and close dates of those accounts.

But what does this mean for me?

Basically, it means that your credit file will now be a more complete picture of your credit profile. Once this extra information is included on your file, when you apply for another credit product, that provider will be able to view this information in conjunction with their own lending criteria as they assess whether to approve your application.

The government says this will result in better deals on loans and lead to greater competition across the whole industry.

With the extra information, providers can better assess the credit risk of new and existing customers and then use this information to offer preferential interest rates to those who present the least risk or even create new products to reward you for your good credit profile.

As Mr Morrison says himself, “For borrowers, this regime should lead to one thing – a better deal on your mortgage, your personal loan or business loan.” 

 

What does this mean for my credit score?

Well, the main difference is that now you can have more control over your credit score! By making your repayments on time you can expect to see your score move up over time.

And for anyone that currently says, “Hey, I pay my mortgage and credit card bills every month, why isn’t my score higher?”, or, “I paid off my personal loan ahead of schedule!” Well, your score will soon reflect just that. Happy days!

 

How can I get ready for CCR?

You should start now! When the banks go live with comprehensive data they may include historical data from your credit accounts that are up to 2 years old!

  • Make sure you pay everything on time as your repayment history is going to count. Maybe consider setting up direct debits
  • Always do your homework before you apply for credit and only apply when you really need it. Your account open and close dates and credit limits are going to be on your credit file
  • Monitor your free credit score and credit report regularly to check your progress
  • Keep an eye out for any incorrect or fraudulent entries on your credit file

 

So, Comprehensive Credit Reporting is definitely coming. Time to get ready!

For more information, check out our handy ‘What is CCR’ infographic here >

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