Kathryn Lee - 21 Jul, 2020

What is Comprehensive Credit Reporting and why could my credit rating change?

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As of July 2019, comprehensive credit reporting is now in full swing. Mortgage data has been uploaded and the big four banks are now sharing information with credit reporting bodies which could affect your credit rating.

It’s called Comprehensive Credit Reporting or CCR and it means that credit providers now have more information to calculate your credit score with. With this extra data, we are also set to see banks practising more responsible lending since they will be able to see a bigger picture of the applicant.

Background: When did CCR start?

Change to Privacy Act introduces Comprehensive Credit Reporting

Officially, CCR started in March 2014 when changes to the Privacy Act allowed banks to release ‘comprehensive credit information’ about their customers, but on a voluntary basis. This included details such as their credit card limit, mortgage repayment history dating back two years, and whether they have any personal or car loans and their repayment history on these.

Prior to this, credit providers could only share negative information such as court judgements, details of overdue payments, and bankruptcy, which could all have very adverse effects on a consumer’s credit rating.

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Mandatory changes force major banks to comply with CCR

As part of the 2017-18 Budget, the Government announced that they wanted to increase competition in the retail and business banking sector. As part of this, they decided that they would mandate comprehensive credit reporting if the banks did not report at least 40% of their data to credit reporters by the end of 2017.

It was thought that this would lead to greater competition in the area and that households would be able to get better mortgage deals.

Towards the end of 2017 it was clear that the banks were not going to meet this mark so the then Treasurer Scott Morrison, announced that the Government would introduce legislation to mandate the comprehensive credit reporting regime.

“If you have a good credit history – you’re paying down your mortgage, you haven’t missed a payment on your car loan and your credit cards are under control – you will be able to demand a better deal on your interest rates or shop around, armed with your data,” said Mr Morrison during a speech when talking about the regime.

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As of the 1st of April 2020, Large Authorised Deposit-taking Institutions (ADIs) mandated to share 50% of credit data (of their choosing) within 90 days.

Now that the 90 days is coming up on the 30th of June 2020, Large ADIs must provide 50% of their credit data.

As of the 1st of April 2021, all Large ADIs mandated mist share the remaining 50% of their credit data within 90 days.

The majority of the mandated CCR deadlines have now passed. By 30 June 2021, all currently legislated institutions will be required to provide comprehensive credit data.

The Government is seeking stakeholder views on the exposure draft of the National Consumer Credit Protection Amendment (Mandatory Credit Reporting) Regulations 2020.

These Regulations provide detail on the Government’s mandatory comprehensive credit reporting regime. Specifically, the Regulations propose to give effect to a number of provisions within the National Consumer Credit Protection Amendment (Mandatory Credit Reporting and Other Measures) Bill 2019.

Related Text: ASIC’s new responsible lending guidelines aim to provide clarity on credit


Big four banks upload their data

The big four banks have uploaded their data, meaning that the regime is now in full swing and customers may finally start to see changes to their credit rating – for better or worse.

Although NAB uploaded its data in February 2019, the other banks were slow to follow. ANZ, Westpac and Commonwealth Bank uploaded their data in September 2019, meaning that 80% of all mortgages and 60% of all credit cards in Australia are known for CCR.

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What will this do to my credit rating?

Simon Bligh, the Chief Executive of the credit bureau, Illion, says that research from the University of Sydney has shown that two-thirds of people’s credit ratings are set to be improved by comprehensive credit reporting – that is, once the rewards of adjusted credit ratings are passed on.

According to Mr Bligh, under CCR, mortgages and other credit deals will begin to look more like insurance policies.

“…premiums – or interest rates and fees – could be priced according to a customer’s risk,” said Bligh.

With the influx of positive data points, it also means that your credit score will probably go up, even if you have defaulted on a credit card in the past. If you defaulted on a credit card five years ago but have always paid your bills on time ever since, you might find your credit rating goes up.

On the other hand, if you have multiple credit cards that you are routinely late in paying, you might see your credit score negatively affected by the new data.

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By the same token, if you have multiple credit cards your credit score might also be negatively affected due to your total liability. Comprehensive credit reporting will only show your credit limit, rather than your amount owing, meaning that if you have three credit cards, all with a limit of $10,000, your total liability will be $30,000, even if you only owe $2000 on one of them.

Words by Kathryn Lee – Originally written on 24 September 2019.

Updated by Ece Demir on 21 July 2020.

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