What is Comprehensive Credit Reporting (CCR)?
Comprehensive Credit Reporting (CCR) is Australia’s new reporting system which offers a complete and balanced assessment of a borrower’s circumstances, through the introduction of positive credit reporting. The aim is to allow lenders to make more informed decisions.
CCR came into force on 1st July 2018, prior to this date credit reporting was mainly negative and included payment defaults and bankruptcies listed. However, CCR combines both negative and positive credit reporting, giving additional information such as type of credit held as well as payment frequency and history for 24 months.
It’s currently mandatory for licensed credit providers to share at least 50 per cent of comprehensive data (including positive reporting) to the Australian government. This will increase to 100% as from 1st July 2019, in line with many other OECD countries.
What is your credit score?
Your credit score is a number from a Credit Reporting Body (CRB) that sums up your credit position. It’s calculated using the information on your credit report that licenced credit providers collate and record to CRBs of which there are three main bodies in Australia.
As an example of one CRB scores range between 0 and 1,000; the higher the number, the better your score.
|Example Credit Score|
|Excellent||800 – 1,000|
|Very good||700 – 799|
|Good||625 – 699|
|Fair||550 – 624|
|Weak||0 – 549|
Why do you need to know your credit score?
Recent research has identified that approximately only a quarter of Australians understand what a credit score is. Yet, the introduction of CCR credit scoring will have an even greater impact on lenders’ decisions regarding consumer lending, so it’s never been more important to know and understand your credit score.
As a rule, it’s important to understand and check your credit score regularly, as something as simple as having out-dated contact details may affect your credit score if lenders cannot reach you.
Benefits to Business Owners
The new CCR brings a number of benefits to business owners:
- It can act as a risk management tool, when giving credit to other businesses.
- Positive reporting shows levels of debt and ability to repay, allowing business owners to obtain finance more readily. Previously, the negative system made it harder for smaller businesses.
- CCR is particularly relevant for Australia’s many sole traders, whose business’s financial health is inevitably connected to their own financial health.
Access to more information, also means there are several risk factors that businesses should be aware of, particularly when managing cashflow. The ability to meet direct debit payments will be assessed in the CCR, this means business owners need to ensure their cashflow needs are met month-to-month so as not to affect their positive credit score. Paying on time and making additional payments will also improve your credit score.
How can I obtain my credit score?
You can obtain your free credit report from a number of agencies, and for assistance you can go to this Government website.
How Can William Buck Finance Help?
William Buck Finance can advise and assist with your current or future lending requirements, such as debt consolidation.
Our team has many years of experience in business lending which when combined with William Buck’s accounting and business advisory skills ensures you get the most appropriate loan for your needs.
Working together, William Buck provides full 360-degree support for your business, allowing you to so you can meet your financial commitments and deal effectively with lenders.