Comprehensive Credit Reporting (CCR) - What is it and how can I benefit from it?
Comprehensive Credit Reporting (otherwise known as CCR) was introduced in March 2014 and has been compulsory for Australia’s big four banks (CBA, ANZ, Westpac and NAB) since July 2019, with more lenders to follow suit by June 2021.
In a nutshell, CCR refers to positive credit reporting, where lenders provide more of their customer’s credit data to credit bureaus like Equifax, Experian and Illion so a more accurate picture of borrowers’ credit history can be shown.
Fair Go Finance voluntarily adopted CCR in October 2019 because of our commitment to being a responsible lender. We act in the best interests of our customers by ensuring that every loan Fair Go Finance offers is affordable for our customers, and that every loan meets their needs, objectives and requirements.
What is Comprehensive Credit Reporting?
Comprehensive Credit Reporting (CCR) is a system where lenders share more of your data. This data is listed on your credit report with the credit bureaus within Australia, such as Equifax and illion.
Before CCR was introduced, Australians’ credit reports contained limited, and mainly negative data such as defaults and bankruptcies. But since CCR was introduced, additional information such as the type of credit you hold and whether you make payments on time, began to be shared by those lenders who implemented CCR.
Below is a quick summary of what data could be listed on your credit report before and after CCR.
| Credit Information | On Your Credit File Before CCR | On Your Credit File After CCR |
|---|---|---|
| Credit inquiry information | Y | Y |
| Credit type applied for | Y | Y |
| Credit amount applied for | Y | Y |
| Date accounts opened | N | Y |
| Date accounts closed | N | Y |
| Type of accounts closed | N | Y |
| Credit limit | N | Y |
| New and previous credit amounts | N | Y |
| Credit providers name | N | Y |
| Overdue account details | N | Y |
| Monthly repayments for the last 24 months | N | Y |
| Default | Y | Y |
| Commercial credit application | Y | Y |
Why was Comprehensive Credit Reporting introduced?
Comprehensive Credit Reporting was a Government-led change and was implemented in Australia predominately to help consumers and better protect their interests.
Historically, Australia has relied on a negative credit reporting system. As the earlier table shows, only events such as defaults (overdue debts) and other credit infringements would be recorded on your credit file, alongside your key personal information.
But with Comprehensive Credit Reporting, both the good information (such as meeting monthly loan repayments on time over the last two years) and the bad (missing a loan payment) can be listed to give a better picture of how reliable you are with making repayments and how you handle credit.
This also gives credit providers/lenders a fairer idea of how much they can lend you, and what rates and terms you can be eligible for.
Top 4 benefits Comprehensive Credit Reporting can provide you.
1. Boost your credit score faster
With your repayment information being able to be shared with the credit bureaus, by making sure you are on-time with your loan and credit card payments can help improve your credit score, which is recalculated and updated every month by the credit bureaus.
And the better your score, the better your credit rating, which can give you more opportunities.
2. Get access to more credit and better deals
Because Comprehensive Credit Reporting lists your good credit behaviour, lenders can more accurately determine your risk profile and likelihood you will repay a loan. The lower your risk, the more likely you will be offered better deals such as lower interest rates or greater access to credit, because you have shown a track record of managing and repaying your debts reliably.
3. Quicker recovery from financial setbacks
It can be hard to recover from negative credit behaviours, such as defaults or collection accounts, however by demonstrating good credit behaviour through a Comprehensive Credit Reporting provider (such as Fair Go Finance) you can recover more quickly from the negative impact of bad credit.
Lenders do understand mistakes happen, but what is key is to make sure you don’t show ongoing negative behaviour.
4. Build your credit history and achieve financial goals faster
For the younger generation in particular, who are just starting to build their credit profile, it can be hard to obtain credit with little or no credit history. With CCR, consumers can now build their credit profiles far quicker, allowing financial goals to be achieved (such as buying your first home) a lot faster.
Does every Australian lender participate in Comprehensive Credit Reporting?
In short, the answer is NO. Therefore, you should always check with a lender before you consider applying with them, if you want to enjoy the benefits CCR has to offer.
To start, CCR was only compulsory for the big 4 banks to implement, and then from April 2020 this was extended to large authorised deposit taking institutions (ADI’s) such as Macquarie and HSBC. For other lenders, it still remains voluntary, but is seen as an important step to remain competitive.
Are there any possible downsides to CCR?
Comprehensive Credit Reporting effectively gives a full picture of a person’s credit history.
And because it includes up to 24 months of a customer’s repayment history, it means not only does it show when payments have been made on time, but also if payments have been missed.
Therefore, if you are frequently late in making payments, this information is accessible to a lender to help them decide whether to lend to you or not.
But overall, Comprehensive Credit Reporting is seen as a positive step for lenders and consumers, and brings Australia in line with the USA, the UK and New Zealand who all use positive credit reporting for a fairer system.
In summary, CCR encourages responsible lending practices by giving access to better deals for borrowers with a record of reliable repayments, whilst offering lenders a fuller, more accurate picture of borrowers’ credit history.
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