Australia's credit scores are changing

This is what you need to know.

Back in 2014, you probably heard a huge hubbub about comprehensive credit reporting. People were excited. Our credit files were going to show more information and this information was going to be good.

With the announcement of positive credit reporting becoming government mandated by July 2018, now has never been a better time to get your credit score. More importantly, your comprehensive credit score.

First, what is comprehensive credit reporting?

Comprehensive credit reporting (CCR) is a positive style of credit reporting that was introduced in Australia in March 2014. After this date, your credit file can also display the following information (along with the negative information, such as missed payments and defaults that it showed before):

  • Type of credit account you applied for
  • Amount of credit you applied for
  • Date you opened a credit account
  • Type of credit account you opened
  • Date you closed your credit account
  • Maximum available amount of credit available under each account
  • New and previous amount of credit available
  • Conditions relating to repayments
  • Details of monthly repayments over last two years
  • Information detailing default agreements

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Is this the same system that is in the US?

The Australian credit score system and the US credit score system are in no ways identical.

The US system of credit reporting is much more far-reaching in terms of the aspects of US residents' lives that it affects as well as the data points it considers to calculate the score. The US score is also much more definitive in its calculation. There is a certain percentage that is affected by payment history (35%), money owed (30%), length of credit history (15%), new credit (10%) and types of credit used (10%).

Australian credit scores are not outlined for us nearly as neatly and we have no way of knowing whether our scores are calculated using similar percentages. All that Australians have to work with are the factors that can affect our credit scores.

Will I be able to see comprehensive data on my credit report?

This information isn't available to the majority of Australians yet. This doesn't mean that the information isn't available or that credit providers haven't been collecting it, it's just that CCR is taking longer to implement than originally anticipated.

Because of this, Federal Treasurer Scott Morrison mandated the Big Four banks (NAB, Westpac, CommBank and NAB) to share comprehensive credit data with credit bureaus.

When will this data be available?

The Big Four banks have been mandated to show comprehensive credit data for 50% of consumer credit accounts by 1 July 2018. According to a recently released draft report, the banks will be able to choose which 50% of accounts they provide data for by this data. They will also have 90 days from 1 July to provide the data set.

The big banks will then be required to have comprehensive data for 100% of consumer credit accounts by 1 July 2019. Again, they will have 90 days from this date to provide the data.

Does this mean we should expect CCR data on our reports now?

Yes, but because the banks can choose which accounts they want to provide comprehensive credit data for, you may have to wait until 2019 to see more data on your credit report.

What are the benefits of comprehensive credit reporting?

There are a number of benefits that have been touted as coming with CCR:

  • Credit providers will have more information at their disposal to make lending decisions, leading to fewer defaults
  • Increased competition between lenders leading to better products
  • Lower interest rates due to increased competition
  • Lenders that offer risk-based pricing, such as peer-to-peer lenders, will be able to make more accurate lending decisions

If you're in the market for credit, check if your score could qualify you for a better rate.

Will our credit score system ever be exactly like America's?

As we mentioned above, the move towards CCR will not make our credit scores exactly like America's. However, the move to a more comprehensive style of reporting could signal a more American-style system down the track.

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2 Responses

  1. Default Gravatar
    DennisSeptember 11, 2017

    Where can find my score?

    • Default Gravatar
      JonathanSeptember 11, 2017

      Hello Dennis,

      Thank you for your inquiry.

      We have a full-guide on how to get your credit score properly. Please take note that you would need to provide your driver’s license details for this to be completed.

      Hope this helps.


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