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From July Australians With Good Credit Histories Will Be Able To Secure Lower Interest Rates

Post by Sharat on April 28, 2018 · Under News · Comments Off on From July Australians With Good Credit Histories Will Be Able To Secure Lower Interest Rates 

Many Australians experience a shudder when they hear the words ‘credit history’, particularly if they are thinking about taking out a personal loan, applying for a credit card or seeking a mortgage. Everything could change in the near future following the implementation of mandatory Comprehensive Credit Reporting (CCR). From the first of July the big four lenders will be forced to share half of their credit data regardless of whether it is positive or negative.

Catching up with the rest of the world

Experts welcome the move saying the move will allow Australia to catch up with the rest of the world. Most ordinary Australians do not know that the country is at the bottom of the developed world rankings when it comes to the ability to obtain cost effective finance. The major reason for this is because Australians cannot make use of their historically good credit behaviour as leverage to secure lower cost finance.

Previously only negative credit history was shared

In most developed nations if a consumer is consistent in paying off their credit card bills, loan repayments and utility payments on time, that good behaviour can be leveraged and the individual will be able to secure loans at a lower interest rate. Prior to 2014 lenders could only see negative credit history which means they were basing the credit worthiness of a potential borrower only on whether their history had any blemishes.

Good historical credit profiles will be rewarded with lower interest rates

Since then a small but growing number of lenders have been voluntarily sharing complete data with credit bureaus who serve as middlemen brokering information about borrowers between lenders. From July 1st however, the big banks will now be forced to adopt the practice as well and by the same date next year they will be required to share 100 per cent of their credit data. The new system means lenders will have a clearer picture of an individual’s credit worthiness because positive historical borrowing behaviour is also included.

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