You might have heard about the changes to the Australia’s credit reporting system, coming into effect in July 2018. A hot topic of conversation in the financial space, with many layers, so we thought we would break it down for you.
We had a chat with Tristan Taylor, General Manager of Credit Services at Experian Australia/New Zealand, who shared some insights and delved into what it really means for you.
“The introduction of CCR is an overwhelmingly beneficial change for Australian borrowers, so it’s important they understand how today’s decisions, such as making credit repayments on time, can have an impact on their credit scores”.
1. Please tell us about the new Credit Score?
Comprehensive Credit Reporting (CCR), allows lenders to make a more complete assessment of your credit history when you apply for credit, resulting in more responsible lending decisions. With the introduction of CCR, credit reports may now include information about the current accounts you hold, what accounts have been opened and closed, the date any default accounts were closed, and how well you meet your repayments.
The new credit score is calculated on the information on your credit report and changes as that information changes. There are key attributes that are used to generate your credit score such as the type of credit provider who has made enquiries on your report, the type of products you have applied for, the credit limit of each of your credit products and credit enquiries.
Changes to information on your credit report may be reflected in your score if comprehensive credit data has been shared with Experian. As Australia moves towards CCR, your credit score might change to reflect this additional information.
2. How is this different from the traditional Credit Score?
When you apply for credit in Australia, you will usually be asked to give a credit provider permission to obtain and assess the information on your credit report to help them determine whether you can repay the loan without too much pressure. This is an important part of the process of their decision to approve your application.
Until the reform of the Privacy Law in 2014, credit providers based their assessments of you as a potential borrower on whether you had any negative information on your credit report. This meant your credit score was based on limited information, namely details on any overdue debts, defaults, bankruptcy, or court judgements against you. As the industry transitions to CCR, lenders will be able to make a more complete assessment of your credit history when you apply for credit, resulting in more responsible lending decisions.
3. What does this mean for consumers?
The introduction of CCR is an overwhelmingly beneficial change for Australian borrowers, so it’s important they understand how today’s decisions, such as making credit repayments on time, can have an impact on their credit scores once lenders begin actively sharing comprehensive historical data. CCR allows borrowers with a strong track record of making timely credit repayments to gain better recognition from lenders and they can potentially access more competitive deals and interest rates.
Even if you do not have a long credit history, if you have a sound one, you may be more likely to be approved for finance – incredibly helpful for first home buyers, for example.
CCR also assists others to avoid entering into unmanageable levels of debt, which could lead to getting into financial difficulty. Moreover, CCR will increase competition among credit providers, meaning there is a potential for many costs to drop for all credit customers.
4. What are your thoughts on CCR updates and how is Experian ensuring they remain compliant?
From our experience in the 18 other countries where we operate a credit bureau, CCR is a much fairer system. The changes will help providers better identify and evaluate who to provide credit to, based on a broader range of data. Positive data gives credit providers a much more comprehensive view of their customer’s financial situation, supporting more responsible lending decisions.
We operate some of the largest credit bureaus in the world and are trusted with securely managing more than 989 million customer records globally. Once Experian Credit Services collects data, it holds information in a secure Australian high security data centre. We utilise industry standard security and encryption processes and technology to ensure that access to personal information is only provided to those employees who need to have access to perform their role.
5. Any future plans for Experian?
While the transition to CCR is a hugely positive move for Australia, we would welcome further data sharing that would bring us in line with global best practice. This would include broadening the depth of the data to incorporate additional data attributes, such as account balance and repayment amounts, as well as expanding the breadth of the data by including other banks, beyond the Big 4, as well as non-financial institution credit providers, such as telecommunication and utility companies.
6. How is Experian keeping up with the latest GDPR changes?
As a leading global information services company, we take security and protection of data very seriously. We support and comply with all local and global measures to keep customer data safe, including the General Data Protection Regulation and the Notifiable Data Breaches scheme here in Australia.
Here is a little about Tristan Taylor, Experian’s General Manager of Credit Services Australia/NZ
An experienced leader of sales, consultancy and delivery teams, Tristan Taylor is Experian’s General Manager of Credit Services for Australia and New Zealand. Tristan’s career at Experian spans over 15 years, during which he has held a variety of technical, operation and consultancy roles. Starting out in the UK within Experian’s Data Quality (DQ) business, Tristan joined the Melbourne office in 2014 as Director of Services for Australia and New Zealand.