Credit scores and the information on your Credit Report are becoming more comprehensive. While the rollout of the new Comprehensive Credit Reporting (CCR) is only starting with the big 4 banks it won't be long before its common practice across the credit industry. With the new reports licensed credit providers get to see a two year snapshot of how financially responsible you have been. Some of the data they will be able to see is:
Your payment history for all loans, credit cards, mortgages or car finance
Whether you have met your minimum repayments on time
Whether the payment was made on time or not
Types of credit accounts open or applied for
Current credit limits on your account
Who your other credit providers are
Your credit score is marked between 0 and 1200, 1200 being good, 0 being bad. If you’re not sitting at around 700 or above, you could find it difficult to obtain finance. If you have a low score it’s not the end of your journey as by paying the correct amount on time and clearing overdue debts will help you to increase it. Doing the opposite will have an adverse effect and cause you to score lower. As will applying for multiple loans at the same time.
It’s not all bad news though as people who demonstrate good credit-based behavior will likely face fewer hurdles to jump over when applying for a new loan and potentially receive a lower rate.
It will also allow you to take more control over how the banks view your situation, allowing you to recover more quickly from adverse situations or to establish a credit history more quickly.
Comprehensive Credit Reporting isn't new and quite common in other markets such as the UK, New Zealand and the United States. These markets also see a lot more risk based pricing structures giving access to lower credit rates for higher scoring individuals.
Your repayment history is stored on your credit file for two years. Only your repayment history from licenced credit providers who hold an Australian Credit Licence can be recorded. Over time we expect to see your credit report include your payment history with all utility providers and telecommunications providers as well.
All in all the outcome of this should help people gain a better understanding of their finances and allow them to get rid of any skeletons in the closet. For those that get good scores it should help you obtain finance easier with lower rates. However, if you often find yourself missing bills or going into your overdraft every month now is the time to improve your financial habits, otherwise accessing finance in the future may become very difficult leaving you with specialist lenders who charge higher rates.
If you want to find out your credit score you can do so through one of these providers:
www.mycreditfile.com.au
www.experian.com.au
www.creditsimple.com.au
www.creditorwatch.com.au
If you would like help reviewing your loans, mortgage or would like to consolidate your debts into one loan we would love to help you source a more suitable and competitive product.
WARNING: The contents of this communication are not designed to replace credit advice. We have not taken into account your needs, objectives or financial situation.
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