What is CCR?
Comprehensive Credit Reporting provides lenders with access to both the positive and negative credit reports of applicants to allow them to make a more balanced assessment of their credit history.
From 1st July 2018, major banks with more than $100 billion in total residential assets and their subsidiaries will be required to supply 50 percent of their CCR data to credit reporting bodies, increasing to 100 percent by July 2019.
A Clear Picture
Hopefully, this will enable applicants who demonstrate good credit behaviour such as prompt debt payments, to be reflected on their credit score. Australia switching to the CCR system will bring us in line with other countries such as UK and US. Recently in the US there has been notice of a lender providing a lower interest rate for applicants with a solid CCR statuses.
What are the benefits for Consumers?
For consumers and small businesses, CCR ensures a more accurate credit score or rating. Presently, we see that the more enquiries are made on a borrower’s credit file, their score reduces and increases the risk for a lender to become wary of a possible “fail” due to a lower credit score. CCR should also benefit people with a short credit history or a thin credit file. The inclusion of positive information will allow consumers and businesses to develop a credit history in a shorter period of time. In turn, this will allow lenders to establish a better view of the business’ ability to repay in a shorter time frame.
The Importance of CCR
A credit score is the “number” given to consumers and business entities by financial institutions that helps determine creditworthiness.
The initial credit score for a consumer is 1200 and the more times a consumer applies for any type of finance, whether availed or not, reduces the score. There have been many instances where consumers apply for credit “On Line”, and did not take the finance, only to find out that their credit score has been affected by the application or enquiry.
Not only do you need to pay your bills, but bills need to be paid by the due date. If you are 14 days late with a credit payment, it will be recorded for 2 years. If you miss a bill payment altogether, after 60 days, that may be recorded as a
“Default” on your credit file and will remain on the credit file for 5 years (if the default is more than $150).
Australians’ credit reports, and now credit scores, used to be something of that people were hazily conscious of. Now that is about to change as your credit report will become your CV (vitae curriculum) that will shape your financial destiny. Your credit score needs to be A-grade or it may become an obstacle for you to achieve your financial goals and security.
If you have any concerns or questions about CCR, Paul has key associates that can assist you to find out more and rectify your situation if it is negative. Contact us today.