Comprehensive Credit Reporting (CCR) is a new system that started in Australia in July of 2018. While this does mean a change to your credit score, it’s actually a beneficial change. With the new CCR system, there will be an inclusion of more positive credit data on your credit report.
Why is this a good thing? The more data that’s included on your credit report, the easier it will be for lenders to make a sound decision about whether you’re a good candidate for credit. In addition, including positive aspects of your lending history on your report will create an increasingly well-rounded view of your spending and financial history.
Because it’s important to stay up-to-date about your credit and how it works, read this guide to understand what’s included with the new CCR system as well as how it works for consumers.
What is Negative Credit Reporting?
Before we jump into what Comprehensive Credit Reporting is, we need to talk about negative credit reporting. Negative credit reporting is the system Australia used for credit reports until March of 2014. This is when the process to roll out the new CCR system came into effect.
Under the negative reporting system, lenders based their entire assessment of a borrower on whether or not they had any negative reports on their credit history.
Things like missed payments, defaults, and so on would show up on the report. This doesn’t give a full picture of the borrower, as many people have a few slip-ups in their financial history. These small mistakes don’t necessarily mean the individual isn’t a good candidate for future credit. Luckily, the system changed in 2018.
What is Comprehensive Credit Reporting?
Now, let’s break down what CCR is exactly and how it applies to you. Your credit report was already comprised of data and information about your debt history that had been shared with a credit bureau such as Equifax or Experian.
Before July of 2018, credit reports listed mostly “negative” information like bankruptcies, defaults, and so on. Under the CCR changes, additional information will be included that help lenders make smarter decisions.
What New Information is in Your Credit Report with CCR?
So what exactly will be listed on your new and improved credit report? In the past, your credit report included your credit enquiry information, credit providers names, overdue account details, and commercial credit applications. Now, your credit report will have all of those things and the following:
- Type of credit you’ve applied for
- How much credit you’ve applied for
- Length of time your credit accounts have been open
- Types of credit accounts you’ve opened
- Dates you’ve closed credit accounts
- Maximum credit available for each account
- Conditions related to your repayment
- Monthly repayments for the previous 2 years
- Default agreement details
Because all of this new information is included, it is likely your credit score changed after the introduction of CCR. The good news is that Equifax reports that most consumers see improvements because of these changes.
What Are the Benefits of CCR?
Why does CCR matter to the everyday consumer? As we mentioned before, Equifax already has shown that these changes will pay off in a big way for the average consumer. There are a few reasons this is a big positive. First, the new introduction of positive information will help balance any minor slip-ups that might have happened in the past, like a single missed payment.
In addition, those with a small credit file or a short credit history now have more information for lenders to work with when deciding credit-worthiness. Because there are more factors being considered, credit scores will no longer be as severely affected by a minor issue.
Ultimately, CCR is an improvement both for consumers and lenders. Consumers can feel more confident that their credit rating accurately reflects their financial history, and lenders can identify better candidates for credit.
How Can You Improve Your Credit Under CCR?
Last but not least, how can you improve your own credit rating under the new system? While it’s still smart to avoid any negative marks on your credit score like those from a default or bankruptcy, you can also take smaller steps to improve your credit worthiness.
The biggest change is that paying your bills on time and improving your debt to income ratio will help more than they did in the past. In addition, regularly check your details with the credit bureaus. All consumers are entitled to a copy of their own credit file once a year, and you need to check that this information is up-to-date and accurate.
The Future of Credit Reporting
Credit reporting has evolved rapidly in Australia. If you look back just a few years, you can point to a number of changes, the biggest of which being the new Comprehensive Credit Reporting system. While it’s easy to be intimidated by these changes, they’re for the greater good.
If you’re struggling with your own credit score, you don’t have to figure things out on your own. The friendly experts at Debt Busters are here to help! Contact a credit professional on 1300 368 322 or fill in the enquiry form below to talk about your own financial goals and debt options today.