What is Comprehensive Credit Reporting (CCR)?
When you apply for credit, lenders like SocietyOne can access your credit report to get a good sense of your financial health and reliability. They can use this information to decide whether to approve your application. Think of it like your financial report card outlining your history with debt.
Your report is based on Comprehensive Credit Reporting (CCR), which highlights positive and negative credit history data.
'Positive' data includes:
- Up to two years of your repayment history, including whether repayments were made on time.
- The number and nature of credit facilities you have you have applied for and , including limits on your credit cards.
- When your accounts were opened and closed.
Negative data includes:
- Past instances of credit enquiries.
- Payment defaults.
- Bankruptcies and court orders and judgements.
- This year, financial hardship information will also be shared for credit reports.
A full credit history - the good and the bad - provides lenders with a complete picture of your capacity to repay a loan and accurately assess the risk of lending to you.
In Australia, three credit bureaus (Equifax, Experian and Illion) offer credit reports to lenders. SocietyOne partners with Experian to securely access your report.
Each credit reporting body has its own method for calculating a credit score, which is a number representing your trustworthiness to repay a loan. Your credit score is one of the main things many lenders review when determining whether to lend you money, mortgage or even grant a new phone plan. So, your number is important. The higher your credit score, the more favourably you will be viewed by lenders.
CCR rewards good financial management by highlighting your positive credit history, which can even counter-balance a 'black mark' on your credit report, like defaulting on a repayment.
But suppose your credit score is too low to obtain a loan. In that case, positive CCR enables you to improve your score over a period of time through good repayment behaviour.
You might assume a high credit card limit indicates you can reliably manage high debt. But actually, reducing your credit limit (and therefore your riskiness) can increase your credit score.
This is because CCR only shows your credit limit but not your actual amount owing. Lenders view your credit limit as the total amount of liability. So, if you have two credit cards, each with a credit limit of $5,000, lenders will calculate your total liability as $10,000, even if you only owe $1,000.
By 28 September 2022, all currently legislated institutions will be required to provide comprehensive credit data to the three credit bureaus. With all financial lenders reporting your borrowing behaviour, it's essential to practice good financial habits, like keeping on top of your repayments.
There's another reason to keep your credit score in top shape, too. Those with a good credit score might be rewarded with the lowest interest rates. Meanwhile, people with poor credit scores might receive a 'risk tax' that comes in the form of a higher interest rate. Bottom line: Know your score and maintain a good one.
Want to know your score?
Lenders pay to access your credit score, but you can obtain it free when you join SocietyOne's Credit Score Club. Get your free credit report with SocietyOne and find out your credit score today.
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