Business and Finance

What is Comprehensive Credit Reporting?

In 2018 Comprehensive Credit Reporting (CCR) came into effect in Australia, enhancing our credit reporting system and allowing for additional information to be securely supplied between credit providers and credit reporting bodies. It helps lenders to make better decisions, with more information on hand, which will benefit and protect both businesses and consumers.

What Is CCR And The Requirements Of The Banks?

Until Comprehensive Credit Reporting was introduced, Australia worked off a ‘negative only’ credit reporting system. Meaning that when you applied for a loan, your credit score was established based on negative elements of your previous credit history. This included elements such as credit enquiries, payment defaults and infringements. The introduction of CCR is a much fairer system for Australian businesses and individuals whose credit scores will now be calculated on positive data from their financial history. CCR takes into account additional data from a person or business’ history including; dates and types of accounts that were opened or closed, credit limits, new and previous credit amounts and monthly repayments from the last 24 months. Essentially this means the next time you apply for a loan, your credit score will be decided based not only on past mistakes or issues but also on your positive finance behaviour.

What Does This Mean For You?

The better distribution of data helps creditors to see a more complete portfolio of your business for upcoming credit applications.

Based on data shared by Equifax in 2018, the average credit score for auto loan, credit card, mortgage and personal loan applications all improved under CCR.

Whilst there were some who experienced a decreased credit rating due to the new reporting system, most Australians and Australian businesses will now find it even easier to apply for a loan with their improved credit rating.

An improved credit rating means you will have more opportunity when applying for a loan. With more lenders competing for your business, you’ll usually be able to find a better and more accurate interest rate.

This also means that for newer businesses or individuals with limited credit history, it will again be easier to get access to loans.

The positive data included in CCR assists in showing lenders the lower risk of an entity or individual based on a history of on-time repayments and similar behaviour.

No longer will a lack of negative data be just an indicator of higher risk.

How Can I Improve My Chances Of Being Approved For A Loan? In order to maintain a positive credit rating, or improve your current score, ensure that you continue engaging in positive finance behaviours. This includes making your repayments on time and keeping on top of your debts. You should also ensure that you are honest and disclose your liabilities when starting new credit applications. With the wealth of data lenders now available, it’s important you are upfront with any potential black marks in your history. This will ensure that you have the best chance of obtaining an approval and that you are presented as a credible option for receiving new credit.

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