Comprehensive Credit Reporting has been around since March 2014. It’s had an increasing spotlight on it since mid-2018, with all credit providers in Australia needing to have 50% of their positive consumer data ready by 1 July 2018, and all of it within another 12 months.
So what does that mean? In this article, we look at what Comprehensive Credit Reporting is, how it has changed from what used to be reported in the past and how this could impact your credit score in the future.
If you’ve ever applied for a loan or credit card, you’ll know that a financial institution collects your income, assets, liabilities and other information about you to determine if you’re able to pay back the loan.
They also request a copy of your credit report. This is used as another tool in the decision-making process on whether to approve your application.
In this past, this credit report was based on a negative reporting system.
You know when sometimes you forgot to take the rubbish out or bring the washing in from the line, and that’s the only thing that someone seems to focus on, while ignoring all the great stuff you do?
That’s kind of how credit reporting used to be.
The main information that lenders would see in your credit report were the negatives like defaults, infringements or bankruptcies, as well as any applications for credit.
With Comprehensive Credit Reporting, it’s more like someone remembering that you did forget to take the rubbish out, but you’re also awesome because you packed the dishwasher and did a load of washing.
Comprehensive Credit Reporting, sometimes called positive reporting or CCR, includes positive data in the report. We’ll share more about what positive data is included further on.
When did the change happen?
It’s been a gradual change to move from negative to positive reporting. In March 2014 changes were made to the Privacy Act 1988 to allow extra information on your credit file.
This extra information was originally optional for financial providers.
But with limited take-up by lenders, the Australian government made it a requirement that licensed credit providers have at least 50% of their positive consumer credit data "ready for reporting" by 1 July 2018. They then have 12 more months to have it all ready.
By 1 July 2019, this change will be fully implemented and reflected in your credit score.
What extra information is included?
The positive data included in your credit report can now help give lenders a more holistic view of your creditworthiness to make more informed decisions.
The extra details (positive data) now included gives information about your repayment history as well as consumer credit liability information.
In terms of repayment history, a licensed credit provider will be able to see 24 months’ worth of repayment history for credit accounts, including credit cards, personal loans and home loans.
They will also be able to see if you made the minimum payment required and if payments were on time.
Telcos and utility companies aren’t licensed providers, so your repayment history for these providers won’t be included in your credit report. And they won’t be able to see your repayment details either if they access your credit report to approve a new contract.
Consumer credit liability information that is shown in your credit report includes:
- Type of credit account
- Date the account was opened and closed
- The name of the credit provider
- Your credit limit for each credit account.
Make positive reporting work for you
If you make your repayments on time each month, this good behaviour will be shown in your report. It allows you to have greater control over how a lender perceives you.
In the past, if you had a default for a missed payment, that was shown in the report, but all the other months when you never missed a payment was not shown.
This new approach means you can recover quickly from any blips on your credit report and helps you to establish a credit history quicker.
While lenders can make better lending decisions with this Comprehensive Credit Reporting, you can benefit from getting a better deal on your credit card or loan.
Check out the six perks a great score can get you.
Is there anything you need to do?
No. The changes are being rolled out by your credit providers, who have until 1 July 2019 to provide all this information.
In the meantime, it’s a good idea to monitor your score and discover why you should care about your score.