Both National Australia Bank (NAB) and Commonwealth Bank of Australia (CBA) have announced that they will participate in Comprehensive Credit Reporting (CCR) in 2018, allowing more Australians the opportunity to improve their credit ratings by exercising positive borrowing habits.
Comprehensive Credit Reporting was introduced in 2014 as an alternative to traditional methods of recording consumer credit history, which typically only take negative events in a borrower’s credit history (e.g. credit rejections, defaulting on loan repayments) into account. Under the CCR scheme, positive events (e.g. successful loan applications, on-time repayments) in a borrower’s credit history are also recorded for lenders to consider when assessing a credit application.
This holistic approach to credit history would have theoretically allowed Australian borrowers to recover from bad credit mistakes by exercising good credit habits. However, lender participation in the CCR scheme was voluntary when it was first introduced, meaning unless you were with the relatively small number of banks and financial institutions taking part in CCR, your good credit history went unrecorded, and didn’t affect your bad credit rating.
With the Australian government now considering the introduction of legislation making CCR participation mandatory for all lenders, Australia’s big banks are making changes to their credit reporting systems in preparation for future regulation.
NAB has announced that it will commence its public participation in CCR in February 2018. This phased rollout is set to start with personal loans, credit cards and overdrafts, to help ensure a smooth transition for bank customers.
CBA has also committed to use CCR data to enhance the residential mortgage process before the end of 2018. According to CBA, it will start its CCR rollout in the home loans sector due to its position as the largest home loan provider.
ANZ previously said in August 2016 that it expected to be providing and receiving data from the CCR scheme in 2017-18, and that rolling out the system would cost the banking industry between $400 million and $500 million.