Comprehensive Credit Reporting (CRR) – or positive reporting – was introduced in 2018 and is now compulsory right across Australia. In short, it means that additional information is provided to, and held by, Credit Reporting Bodies (CRBs) in Australia. This information is then used in order to make informed lending decisions. But what exactly is comprehensive credit reporting and what does it mean for you? How might it affect your ability to borrow money from a lender?
What is comprehensive credit reporting?
It was in 2014 that changes were originally made to the Privacy Act 1988. These changes allowed for the inclusion of extra information about your credit history in your credit file. While the move to CRR was initially optional, by 2018 it was made compulsory to show a complete picture of your credit profile.
This means lenders are provided with a better picture of your credit history to make a decision when it comes to offering a loan. The report includes information about current accounts, what accounts have been opened and closed and whether or not repayments on these accounts were met.
Including more positive credit data on your credit report gives lenders a much clearer picture of your overall finances. This availability of data will also have had an affect on your credit score.
Difference between negative and positive reporting
In the past, Australia operated on a negative reporting system. This means on a person’s file, the only information available is personal information and any negative financial behaviours. Your credit score was essentially a reflection of all your bad credit transactions.
Some people may have bad credit due to repeated missed payments and taking out more debt than they can afford to repay. However, for others, a simple mistake could have affected their whole file. This meant that if you slipped up once this negative behaviour would go on your file without showing all the positive behaviour in your past.
Positive reporting ensures all this information is available. The new information required includes:
- Your last two years of repayment history. They will see both the good and the bad.
- Whether the payment was made on time. If it was, lenders will see this positive aspect now.
- The dates credit accounts were open and closed. This lets lenders know how much credit you have taken out.
- Different types of credit you have access to.
- The name of your credit providers.
- The current limit on your credit accounts. This enables them to see how well you manage your current credit.
What does this mean for lenders?
There are many benefits that come with greater access to information. For lenders:
- Having access to this comprehensive picture allows them to truly assess the risk of offering a loan to a customer.
- Knowing their full credit history also allows the lender to tailor the offer to that particular consumer, based on their past habits.
- Avoids any mishaps in terms of offering a loan to an individual who is under financial stress. This will result in fewer bankruptcies and bad debts.
What does this mean for you?
As a consumer, what is comprehensive credit reporting and what does it mean for you? Here are just some of the benefits that come with it:
- All your credit behaviours are registered, which can balance out any negative slip-ups that may have occurred in the past.
- If you don’t have much of credit history, there will be more information available in your file relating to your creditworthiness that banks can use in the decision to offer a loan.
- In the past, one negative event could have a big impact on your credit score. Now, with the detailed level of reporting included, it is more likely to take multiple missed payments for it to affect a lender’s decision.
- As a result, your credit score is likely to be more reliable as well. It will offer a much more accurate overview of your financial history, compared to a credit score that is put together through negative reporting.
How can I influence my comprehensive credit reporting?
Unlike your credit rating, you have a little bit more control when it comes to your credit reporting. You have the chance to show off how you manage your credit, how you repay it and all the positive behaviours you have exhibited in the past.
If you are looking for a little bit of help to get your credit back on track, speak to someone who can help. The professional team at Clean Credit can help you sort your finances so that your credit report is glowing. If you are looking to increase your chances at taking out that next loan, speak to the experts today.