Puzzle Finance Blog


What the new comprehensive credit reporting system means for you


ON MARCH 12, a new comprehensive credit reporting system (CCR) will come into effect in Australia that will change the way lenders assess risks when taking new clients.

At present, a person’s credit file — the detailed collection of their financial history — is governed by the Privacy Act and only provides limited negative information, like defaults and bankruptcies to lenders.

However under the new system, known as CCR, a much wider range of information will be available, from details of credit cards and personal loans to monthly bill repayment history.

The information will also be able to be shared among credit providers, but not with telecommunications and utility companies at this stage.

Credit reporting agency Veda’s marketing manager Belinda Diprose said the changes are designed to provide a clearer picture of consumer behaviour.

“It’s really about making sure people aren’t overextending themselves and lenders have best possible picture when it comes to making a credit decisions,” she said.

“Previously they were able to share some information [like] credit applications you made as well as if you have an overdue debt, default, bankruptcy, court judgments.”

However the changes mean companies will be able to access additional information around the types of credit, limits and how often people pay their bills on time.

“If you miss a repayment by more than five days that will be marked on your file under the new system, However a default is not marked just because you missed a repayment,” Ms Diprose said.

Credit defaults are when a payment of $150 is more than 60 days overdue.

Ms Diprose said although the changes mean more information will be collected, they will allow people to establish a positive credit rating quickly and show they have recovered from negative events.

However people will need to remember to be vigilant with bill payments in order to keep their file clean — which could be a struggle considering 80 per cent of Australians don’t keep track of their credit history.

Ms Diprose said the changes will bring Australia more in line with the US and UK, where consumers actively use their credit score to seek out a good deal from providers.

“A good credit history makes you more attractive to credit providers … It’s a really important piece of that lending decision so you can get credit you want,” she said.

Veda’s top tips for managing your credit rating: 

• Set up direct debits to ensure bills are paid on time

 • Schedule loan repayments for payday

 • Keep track of credit commitments and only apply for credit when you really need it

 • Credit includes things like store finance so don’t neglect payments on your fridge or car

• Close any accounts you don’t need

• Get your bills via email and flag them to make sure they’re paid on time

• If you’re having trouble meeting payments, ask for an extension or negotiate new terms

• Get a copy of your credit report so you know where you stand

To get a copy of your credit score visit Veda.com.au

Posted by News Limited Network on 27th February, 2014 | Comments | Trackbacks
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