Comprehensive (Positive) Credit Reporting (CCR) and your Credit File

From July 1st, 2018, Positive Credit Reporting became mandatory in Australia. Up until now, Australian Credit providers operated under the Negative Reporting system which was based around only making note of negative credit events. So now, if you have good repayment history with a credit provider or always pay your bills on time, this will work in your favour and increase your Credit score. Obviously, the invers applies, and if you have poor credit behaviour then your credit score will reduce.

One of the most detrimental ways to impact your credit Rating is to apply for multiple loans or credit facilities in a short space of time. This includes applications for personal credit or credit for your Business, especially if you are a company Director. For this reason, it has never been more important to have a trusted Finance Broker. All too often, we have clients coming to us after un-skilled or un-professional 3rd parties apply in multiple places for credit on the client’s behalf. Often the client’s credit file has been so negatively impacted that obtaining Finance becomes almost impossible.

We have seen this with very good quality clients with great previous credit history who may have a new business or changed business structure. We recently came across client with perfect credit history who had recently set up a new business. Obtaining finance for a new business can be challenging but they allowed a car dealership Finance Manager without the necessary experience and financier policy knowledge to ‘shop around’ the car Finance application unsuccessfully. The client’s credit score had reduced significantly as a result obtaining Finance for that client was very difficult.

Your Credit Rating is very important so before applying for credit, make sure sound due diligence has been done by a Finance professional on the lender policy and that you are more than likely to be approved before a credit check is done. Here are some of things you need to know about managing your credit rating:

Weighting for your Credit Rating:
  • 35% payment history;
  • 30% amount owed;
  • 15% length of history;
  • 10% new credit;
  • 10% types of credit used
Positive for Credit Rating:
  • Excellent: 833 – 1,200
  • Very Good: 726 – 832
  • Good: 622 – 725
  • Average: 510 – 621
  • Below Average: 0 – 509
Positive for Credit Rating:
  • + Paying bills on time (especially bills over $150)
  • + Paying off Credit Card Debt or keeping a low balance
  • + Making your repayments on time every month for all credit
Negative for Credit Rating:
  • – Apply regularly for Credit Cards or loans, especially if applications are being rejected
  • – Applying for loans with ‘Pay Day’ lenders
  • – Making late payments on credit cards or loans
  • – Doing a balance transfer on a credit card and not repaying balance by end of promotional period

If you have any questions in relation to your credit file or Credit Reporting, please feel free to call our office on 1300 334 843 and speak to one of our experienced Brokers.