Don’t be a slacker…Your loan depends on it.

Have you been slacking? Missing loan, credit card or utility bill payments? With the introduction of Comprehensive Credit Reporting (or CCR for short) it is more important than ever to make your repayments on time.

CCR was introduced in July 2018 and is a system whereby lenders share more of your data with credit bureaus such as Equifax and Experian, which in turn will be listed on your credit report. Currently, Australians mainly have negative information such as defaults and bankruptcies listed on their credit report, but with CCR additional information such as the type of credit we hold and whether we make payments on time will be included.

If you are applying for a credit card, a loan, or to buy goods or services on credit, your credit report can make or break your application.

Credit reports record your credit history – from how many times you applied for credit and which loans were opened, to your history of making repayments, defaults and how much debt you have available. This report can be condensed into a ‘credit score’ – your credit score compares you to other borrowers and assesses your creditworthiness to help credit providers decide who to lend to and how much to charge for interest.

Credit providers will use your credit report or credit score, any information you provide during the application process and other details to determine if they will lend to you, how much they will lend and on what terms.

Good news…

If you have been paying off your credit card and loans on time, this will count towards your credit worthiness – as you have been demonstrating your ability to responsibly manage debts. Credit providers can check if the credit you applied for is right for you. Better still, they may offer a loan with an interest rate and repayment schedule that is tailored to your unique circumstances.

Bad news…

With a clearer picture of your financial health, credit providers are in a better position to see if you should be given credit. A poor credit history will be more obvious and you may not be approved for credit.

But all is not lost. Under the new system, if you pay off your overdue payments and continue to pay your debts on time, credit providers will be able to see that you are now managing your loans (however, defaults will continue to stay on your credit report for five years).

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