Credit where due

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

MONEY TALKS: Financial coach Jennifer Cramer Lewis urges confident talk about financial plans to foster positive results. 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.