Recently, there is much brouhaha over personal credit scores and credit checks.
If you are seeking credit online or directly with a bank, a credit check is conducted and your enquiry is recorded. This results in a ‘hit’ on your file. The more ‘hits’ are recorded on your Veda Credit file, the higher the possibility of your score being reduced.
Most lenders scrutinise an applicant’s credit file and if they note that an applicant has been seeking finance aggressively, it may have an adverse effect on their decision.
This reporting is known as Negative Reporting as it does not provide the lender with any details of current loans, limits and repayment history.
Comprehensive Credit Reporting (also referred to as Positive Reporting)
Australia is now moving towards a Positive Credit Reporting System. This new system will provide lenders with more information on the applicant’s credit history.
The Positive Reporting System (CCR) will provide the lender with :-
List of all credit accounts such as real property mortgages, credit cards and auto loans
• Date each account was opened and closed
Latest Credit Limit
• Loan terms and repayment types
• Repayment history for up to 24 months
It should be mentioned that for open credit accounts (including credit cards) that may result in a mismatch in the information provided in a loan application and the CCR, the lender will need to complete a serviceability assessment on all credit limits.
Therefore, it is important to disclose all information from the outset to enable a complete assessment.
If there are unused credit cards, the applicant should consider either cancelling or reducing the credit limits as this may affect the overall serviceability of any new finance.
The new CCR will enable the lender to make a more informed decision based on the applicant’s true current financial position.
A professional finance broker should conduct a credit check prior to any application and address any issues prior to submission.
Talk to Paul today who is able to complete this report for you and is very experienced to help you mitigate any issues to ensure a higher rate of success in your application.