Comprehensive Credit Reporting and Its Effect on Your Personal Finances

The Comprehensive Credit Reporting is a mandate implemented by the Australian government to organizations involved in credit reporting. The mandate requires these organizations to have access to the positive credit behavior of their clients. Both lenders and borrowers will benefit from this since both parties will have current financial records and histories, including the good ones, easily available on the credit report.

How Does the Comprehensive Credit Reporting Works?

Fifty percent of your financial history will be shared by the top 4 banks in Australia to your lenders. By July 2019, 100% of these data will already be available for banks. Starting July 1, 50% of your financial data, whichever a bank may see fit, will become available to your credit report. Your monthly payment history on your bills, credit cards, and loans, mostly positive histories, will now be available on your file. However, delayed payments and other red flags such as missed payments more than 14 days will also be available on your file as well.

The good side of the comprehensive credit reporting is the lenders get to see how good and responsible a client you are. You’ll be able to show creditworthiness and increase your chances of getting a mortgage or a car finance.

The bad side is for those who continuously suffer financial difficulties. Instead of a 60-day turnout for defaults, your missed payments will be instantly available on your file after 2 weeks of failure to pay.

A Fairer System on Your Financial History

Prior to the implementation of the Comprehensive Credit Reporting mandate, your credit score is mostly determined by the number of delinquent reports you have on your file. The more marks on your report, the lower your credit score is.

Your credit report contains all the negative aspects of your finances. The items included in your credit report are your financial mistakes and lapses. With the Comprehensive Credit Reporting taking effect, your positive actions towards your financial obligations will also be counted and included in your credit score.

Your past financial mistakes are not the only basis for your credit score anymore. You’ll most likely get a higher credit score if you have several positive points on your financial history.

These may include:

• Cleared debts
• Regular or advance payments for loans
• Additional savings account
• Updated utility bill payments
• Cleared balance accounts
• Credit Limits

Although the banks will have full control over what aspects of your finances will be included in the Comprehensive Credit Report, this is bound to change by 2019. All your financial histories will be shared with your lenders and banks by July 2019 as mandated by the law. Borrowers who do not have a long credit history would get better chances of getting approved for finance. Competitive deals and interest rates will be easier access to Aussies as their creditworthiness gets stronger.

Banks are not the only one expected to share information about their clients. Lenders and other non-conforming financial companies are expected to share the comprehensive credit information of their clients as well. This includes payments histories going as far from April 2018 up to the present, both good and bad payment histories.

People with bad credit will not be hounded with their financial mistakes in the past. The additional credit information, mostly positive ones will help potential lenders and banks to get a better gist of the client’s borrowing and payment history making it easier to gauge their capacity and personality as a client.

So how does the Comprehensive Credit Reporting affect your personal finance?

Generally, you get more out of your money’s worth. Instead of having to burden a high-interest rate due to being a high-risk client, opportunities like better interest rates, longer payment terms and decreased down payment or fees are mostly the loan features you get to enjoy. Being able to have access to such deals and special rates for people with good credit scores. You can allow what you save from these special deals to other aspects of your life that need financial attention.