Credit where due

Lenders will soon be able to learn the good and the bad be­fore grant­ing loans. So­phie Elsworth re­ports

The Western Star - - LIFE | FINANCES -

CUS­TOMERS’ full re­pay­ment his­to­ries – good and bad – will soon be put under the mi­cro­scope by lenders when de­ter­min­ing whether or not they can get a loan.

Those who have missed pay­ments or have a black mark against their name, watch out – it may be hard to get credit.

The com­pre­hen­sive credit re­port­ing (CCR) scheme has been tread­ing wa­ter for years, forc­ing Trea­surer Scott Mor­ri­son to re­cently in­ter­vene and hold the big four banks to ac­count.

As a re­sult, in eight months’ time CCR will force the na­tion’s largest lenders to make cus­tomers’ de­tailed pos­i­tive and neg­a­tive credit in­for­ma­tion read­ily avail­able to all fi­nan­cial in­sti­tu­tions, so in short what you’re do­ing now with credit will mat­ter.

Pos­i­tive credit re­port­ing in­cludes:

Num­ber of credit ac­counts you hold.

When credit ac­counts have been opened and closed. Credit lim­its. 24-month re­pay­ment his­tory.

Pre­vi­ously lenders could vol­un­tar­ily pro­vide

“neg­a­tive” in­for­ma­tion about their cus­tomers’ re­pay­ment abil­i­ties in­clud­ing in­for­ma­tion such as credit in­quiries with other lenders, de­faults and bank­rupt­cies. Credit re­port­ing agency Il­lium’s credit ad­viser Stephen Kouk­oulas be­lieves the changes will en­sure peo­ple with a strong credit his­tory will find it eas­ier to ac­cess credit. “They will pos­si­bly pay a lower in­ter­est rate when they do get credit and it will also re­duce the risk of money be­ing ex­tended to peo­ple who have ‘bad credit’,’’ he said. “At a time when house­hold debt is al­ready very high we don’t want to have a tick-up of credit to peo­ple who won’t be able to re­pay.”

Na­tional Aus­tralia Bank will be the first big bank to share pos­i­tive and neg­a­tive credit in­for­ma­tion, be­gin­ning in Fe­bru­ary.

The bank’s chief op­er­at­ing of­fi­cer, Antony Cahill, said the change to com­pre­hen­sive credit re­port­ing was “the right thing to do for our cus­tomers”.

He be­lieves the changes will pro­vide a “holis­tic pic­ture of a cus­tomer’s credit sit­u­a­tion” and will mean “we’re bet­ter able to match the pro­vi­sion of credit to a cus­tomer’s in­di­vid­ual needs”.

He urged peo­ple to keep upto-date with their re­pay­ments in­clud­ing mort­gages, per­sonal loans and util­ity bills.

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