How Will Comprehensive Credit Reporting Impact You?

How Will Comprehensive Credit Reporting Impact You?

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A credit rating or “credit score” is a numerical score that represents how trustworthy your reputation is as a borrower to a lender.

A person’s typical credit score could range from 0-1200;

– Excellent: 833-1200
– Very Good: 726-832
– Good: 622-725
– Average: 510-621
– Below Average: 0-509

The higher our credit score is, the better chance of getting our finance application approved by a lender.

How to maintain a good credit score?

Do: Paying bills on time
Do: Paying off outstanding loans and credit card debt
Do: Having a consistently low balance on your credit card
Do: Having an available credit limit much higher than your usual credit balance

Don’t: Bills or repayments for at least $150 that are overdue by 60 days or more
Don’t: Applying too often for credit cards or loans and being rejected for a credit card or loan
Don’t: Making late payments on your credit card or loan
Don’t: Getting a balance transfer credit card but not repaying the balance transfer by the end of the promotional interest rate period
Don’t: Getting multiple balance transfer credit cards one after another

Comprehensive Credit Reporting

From 1st of July this year, a complete picture of an individual’s credit profile can be held on the credit file. On top of the current content (employment history, residential address history, credit enquiry history, any company directorship, bankruptcy record), the following data points have also been added:

– Current type of credit accounts held and their limits
– The date the credit accounts were opened and closed
– The name of the credit provider
– Repayment history for credit accounts such as credit cards, home loans and personal loans
– Whether you have made a payment or minimum payment required – Whether the repayment was made on time or not (24months repayment history)

Allowing lenders to have a clear and complete picture of their applicants. This information can also be used in their pricing model – i.e. pricing for risk.

Don’t panic if you have a low credit score

For whatever reasons, you might have a lower credit score than what you would like to have. You might find it is difficult to get finance request approved because of this.

The good news is that there are numbers of lenders who are specialised in providing solutions to clients who have low credit scores. However, the application costs and ongoing interest rate’s could be higher.

Our individual credit report will include more and more details from1st July 2018. Lenders will apply more on our credit report/ score to determent the outcome of our application. In the not too distant future, lenders will use this information to determent the interest rate they are going to charge on our home loans as well. So different individual could have different interest rates with the same lender because of different individual credit score.

So for us, to keep an excellent credit score is getting more and more important!

Echo Yao

Over 10 years finance industry experience and passion for helping people achieve their financial goals. Specialised in residential lending, commercial and asset finance.