What is Comprehensive Credit Reporting?

Nov 15, 2022

When you apply for a loan or any other credit product, lenders check your ability to repay the loan before lending you money. Most lenders will check both your credit report and credit score, which allows them to determine your creditworthiness and the risk involved in giving you the loan. A good credit report and credit score will make it easier to qualify for mortgages and car loans, start a business, and, in some cases, secure a job. A bad report and score can lead to creditors being reluctant to lend to you or charging you higher interest rates and fat fees.

In the past, only negative borrowing patterns – like late payments and defaults – were listed in your credit report and could affect your credit score. However, since the introduction of Comprehensive Credit Reporting (CCR), positive borrowing patterns – like making your payments on time – can help you increase your credit score.

If you are planning to take out a loan or want to improve your credit score, you might be interested in finding out what your credit report contains and how your credit report is prepared. So, in this post, we will explain all the important attributes of a credit report and also tell you about the reporting system called CCR that is used by credit reporting agencies in Australia.

What is a credit score?

Your credit score sums up the information on your credit report into one number, designed to represent your credit risk, or the likelihood that you will pay your bills on time. The higher the score, the more creditworthy you’ll likely appear to reputable financial institutions, like banks.

Higher credit scores generally result in more favourable credit terms.

Credit scores are based on the information in your credit report at a point in time and can change throughout your life. They rely on a huge number of variables with different weightings in different circumstances to calculate a score that is a proven predictor of your credit risk and ability to repay a debt.

There are a number of different credit scores and scoring models. If you find out your credit score through a credit reporting agency like Equifax, you will receive a number between 0 to 1,200; while Experian and Illion provide a number between 0 to 1,000. The credit reporting agencies collect information from publicly available sources (such as court records and documents), as well as any information provided to them by the lenders they work with. These three credit reporting agencies use their own calculation to determine your credit score. Different credit events, or even lack of recent credit activity, are weighted differently by each agency, there can be discrepancies between your Equifax, Experian and Illion credit score, so it pays to check all three for any concerns.

What is Comprehensive Credit Reporting (CCR)?

CCR was introduced in Australia in 2014. The CCR system directs credit reporting agencies to collect and report comprehensive consumer credit information, including both positive and negative items, which lenders or credit providers can use to make informed lending decisions. This means that credit reporting agencies will not only record negative items, such as defaults, missed payments, and serious credit infringements, but also document positive credit behaviours – like making your payments on time – on your credit report.

Before the CCR, Australia operated under a negative reporting system that required credit reporting agencies to report only negative credit information and not positive information. But after the implementation of CCR, all credit information, such as your recent repayment history, types of credit products you have taken, credit limits on your credit accounts, account opening, and closure dates make part of your credit report. So, if you can demonstrate that you always repay your debt on time, it will be reported on your credit report, which can benefit you in securing further loans at better terms. The CCR provides credit providers with a broad picture of your credit history, allowing them to evaluate each borrower’s application thoroughly before approving the loan.

How can Comprehensive Credit Reporting affect your credit score?

The CCR and the reporting of positive credit data in your credit report can have an impact on your credit score. For example, if you repay your loan instalments on time, restrict applications for new loans, and deal with reputable credit providers, all of these positive credit behaviors can boost your credit score. In contrast, if you have a history of missed payments, frequent credit applications, and a high number of loans, your credit score will be negatively impacted by these actions. Ultimately, your credit score will determine whether or not you get approved for the loan. Your positive credit data can improve your credit score and help you secure loans at better terms than those with low credit scores.

Benefits of Comprehensive Credit Reporting

With the introduction of CCR, you now have the incentive to show positive credit behavior as it is recorded on your credit report and improves your credit history. Lenders can get a complete picture of borrowers past behaviour with credit, and they can even consider lending to those who had a bad history of managing credit but can demonstrate more recently good credit behavior. So, even if you had a bad credit history, you can improve your chances of getting new loans due to CCR.

What is on a credit report?

Now that you know about the CCR being used by the credit reporting agencies, it is important that you learn what a typical credit report contains. This will help you build a good credit score or improve it if your existing credit score is poor. Here is what a typical credit report has:

Personal Information:

Your personal information, such as your name, gender, date of birth, residential address, employer, etc.

Credit Score and Rating:

Your credit score and the associated rating. For example, if you are checking your credit report from Experian, a credit score in the range of 700-799 would be rated as Very Good.

Credit Products:

The credit products (credit cards, personal loans) you have taken over the past two years. Other data, such as credit providers, credit limit, and opening and closing dates of these accounts, are also mentioned along with the credit products.

Repayment History:

Repayment history, such as repayment amount, due dates, frequency of on-time and overdue payments, etc.

Financial Hardship Arrangements:

If you have entered into a hardship arrangement with a credit provider for a credit product, it will appear on your credit report on the month the arrangement was entered into. The listing stays on your report for 12 months from the entry date and is deleted afterwards.

Defaults:

Defaults on credit products, such as credit cards, personal loans, or utility bills, are shown on the credit report. For a default to appear on your credit report, the amount owed must be greater than $150; the amount must be overdue by 60 or more days, and you must have been informed in writing by the credit provider about the missed payment.

Credit Applications:

Credit applications you have submitted to different lenders, the total amount you have borrowed, and any loan guarantees you’ve given also appear on your credit report.

Bankruptcy and Debt Agreements:

Bankruptcies, personal insolvency agreements, debt agreements, and court judgements against you also appear on your credit report.

Credit Enquiries:

Credit enquiries made by credit providers for evaluating your profile for approving new loans also appear on your report.

Final Thoughts

Comprehensive Credit Reporting is equally beneficial for both borrowers and lenders. Positive credit behaviors, such as good repayment history and infrequent credit requests, are recorded on credit reports, which allows borrowers with poor credit history to improve their credit rating. On the other hand, lenders get a chance to view a complete picture of the borrowers, not just the negative items. This allows lenders to consider even those borrowers who had a bad credit history but have recently started to develop positive credit behavior.

B M Peachey

B M Peachey, has over 15 years of experience investing in property and the stock market, in both New Zealand and Australia. She has a post-graduate degree, with qualifications in Finance and Mortgage Broking and in Accounting and Bookkeeping. She is passionate about ensuring people have access to credible, reliable, and easy to understand information to help them get in control of the life they REALLY want to live.<

Google Rating
5.0
Based on 15 reviews
js_loader
Get Your Free Credit and Debt Assessment Now

To help you take control of debt and achieve financial freedom




    Blogs

    To help you take control of debt and achieve financial freedom

    How Does Debt Recycling Work? Benefits, Risks and Strategies

    What is Debt Recycling? Debt recycling is a financial strategy that converts non-tax-deductible debt, like a home mortgage, into tax-deductible debt linked to income-producing investments. This process aims to reduce overall debt, grow wealth, and improve tax...

    How Long Does A Bad Credit Rating Last? Complete Guide

    Bad credit refers to a low credit score or a poor credit history, indicating to lenders that an individual may be at a higher risk for borrowing.This condition is typically the result of past financial behaviours like late payments, defaults, bankruptcy, or carrying...

    How to pay off HECS Debt Earlier? Everything you need to know

    HECS debt is an interest-free loan that is provided to students for higher education. It is also known as HELP or Higher Education Loan Programme. When you apply for this loan, the government of Australia will provide tuition fees directly to your institution. Once...

    Does bankruptcy clear tax debt in Australia?

    Bankruptcy is a legal process in which the court makes solutions for individuals or businesses to get rid of debt. It can have several consequences and benefits. Bankruptcy is a complex process so always analyse the situation calmly, before taking any action....

    What is Bankruptcy vs Insolvency?

    Many people use the terms bankruptcy and insolvency interchangeably for referring to a person or a company that is unable to pay off debts. In Australia the words ‘bankrupt’ and insolvent’ are often used interchangeably and are taken to mean the same thing when...

    Am I Responsible for My Spouse’s Debt in Australia

    Marriage is a commitment to your partner to stand by each other through all circumstances for the rest of your life. Managing your finances jointly as a couple can be challenging, particularly when your financial situation is not great and either of you carries...

    How to Get a Personal Loan with Bad Credit

    If you have a below-average credit score, it can be challenging to secure a personal loan from traditional lenders, as they may view you as a high-risk borrower. However, it's important to note that having bad credit does not necessarily mean that obtaining a loan is...

    How to Get a Car Loan with Bad Credit in Australia?

    If you have bad credit, getting new loans becomes more difficult. Conventional lenders, such as big financial institutions like banks, mostly reject applicants with poor credit histories. But this doesn’t mean that you won’t find any lender willing to lend you money....

    Defaults vs Serious Credit Infringements – Complete Guide

    Defaults and serious credit infringements both harm your credit history, signaling to lenders past financial struggles. Their presence on your credit report can hinder loan approvals, affect interest rates, and impact certain background checks. Both can impact your...

    How Many People Have Bad Credit in Australia?

    According to data released by the Reserve Bank of Australia (the RBA), as of the 31 August 2022 there were 13.17 million credit and charge card accounts and around 17.5 million credit and charge cards operating in Australia.  The average credit card balance in August...

    I Need Help Managing Debt
    I Need Help Fixing my Credit Score
    I Need Help With Bankruptcy

    Disclaimer: The information in this article is general in nature as it has been prepared without taking account of your specific objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.