How Positive Credit Reporting Impacts Your Life

"How Positive Credit Reporting Impacts Your Life"

Assessing customers for their eligibility for a loan or credit card involves taking a look at their credit report to gauge their qualification. These days, lenders are required to check for the overall creditworthiness of a customer that doesn’t focus solely on their past incapacities. This has become possible today, thanks to the existence of positive credit reporting.

Positive credit reporting has indeed changed the way loan application assessments are done and has given customers easier access to financial help whenever they need it. Credit reports, however, remains to be understood by the public for all their pros and cons and what power they hold that impacts one’s life.

Let’s take a look at what credit reporting is, the advantages it provides, and what you can do in case you have been reported to have a bad credit history.

What is a credit report?

In essence, a credit report is your financial history. It provides a summary or record of all your personal loans, credit cards, and the payments you have made to pay off these obligations. It also includes all the repayments you have missed on the same.

Previously, it was mandatory for lending institutions in Australia to provide a record of a customer’s negative credit events, which include missed repayments or defaults. This was to allow future creditors to gain access to a customer’s financial history.

When a negative event is listed in your credit report, it will usually remain in your record for up to seven years.

Negative and positive credit reporting

However, the problem with this setup was that creditors would only get to see the negative credit events of a person’s financial history. The worst part was that these negative events became the deciding factor when assessing a customer for loan or credit card eligibility.

This was the reason why in July 2018, it became mandatory for all creditors to record the positive credit events on a customer’s credit history as well. This is to encourage lenders to base their assessments on the overall financial history of a customer.

The rationale behind this development is that the financial capability of a customer can change overtime, thus assessment shouldn’t focus mainly on a few missed payments or defaults.

How positive credit reporting works

Also known as Comprehensive Credit Reporting or CCR, positive credit reporting basically mandates creditors to record all positive credit events in a person’s credit history. This includes all repayments on loans or credit cards that have been made on time and in advance, as well as larger payments that were committed.

When before only negative events impact a person’s credit score, the inclusion of positive credit events has changed the game entirely to allow customers to have better credit ratings. As repayment histories are now recorded as well, you can expect your credit score to reflect your good credit behaviour.

Your CCR has a shelf life of two years and can be accessed only by banks and private lending institutions with an Australian Credit Licence accreditation. Once you apply for a loan or credit card, they can access your repayment history to assess your eligibility.

How you can benefit from positive credit reporting

By gauging loan eligibility from a direct lender based on a comprehensive financial history, this allows customers to have more confidence in accessing financial assistance from lenders, banks, credit unions, and other credit providers.

In detail, these are the advantages that you can derive from a positive credit report:

  • You can expect a more accurate credit score that reflects your overall financial history.
  • You can gain access to more information about your creditworthiness.
  • Should there be one or two defaults or missed repayments on your credit report, you no longer have to worry that this will affect your eligibility to get a high approval rate loan. Lenders will base your creditworthiness on more positive credit events that are listed than the negative ones.

With all the benefits that positive credit reporting provides, it is important that you have an idea of your current financial standing by availing yourself of your credit report. This way, you will know your overall financial history and check where you need to adjust to improve your credit rating.

Where to get your credit report

These days, it is easy to gain access to credit reports through reputable reporting companies. The good news is that some of these companies offer credit reports for free.

You can get yours either from Equifax, Experian, or illion. These are Australia’s three main reporting companies.

These companies can provide you with a credit report that you can instantly access through their online channel for free. The free online credit report from one of these credit reporting agencies is offered once a year and posting usually takes about 21 days.

Should you want your credit report immediately, you have the option to pay to get access to an instant download.

Where to check your credit score

Like credit reports, credit scores can also be accessed online for free. In Australia, you can reach out to online providers that offer credit score checks for free.

Some online providers you can access for a free credit score check include:

  1. Getcreditscore – to know your credit score from Equifax
  2. Finder and Creditsavvy – for free online credit score from Experian
  3. Credit Simple – to check your credit score from illion
  4. WisrCredit – to know your credit score from Equifax and Experian

Customers are encouraged to consider not just one online provider to check for their credit scores. It is best to access multiple online providers to know your positive credit score and get an idea of your overall financial standing.

How to evaluate your credit score

Once you get hold of your credit score, it is important that you examine your credit rating in greater detail to know where you stand financially. Your credit score is determined based on the following information:

  1. Credit card accounts
  2. History of monthly repayments
  3. Credit enquiries made
  4. Length of credit history
  5. Court judgments

These details are what you can also expect to see when you receive your credit report, which also provides information on your employment history, as well as your name, birthdate, and residential addresses.

Based on this information, your credit score will be measured against a scale of 0 to 1200. Having a credit score of over 620 means you have a good credit history.

Ways to improve your credit score

Should you have a bad credit score, take comfort in the fact that you can still improve it. Here are some steps you can do to improve your credit rating:

  1. Make a conscious effort to pay your bills and repayment dues on time or in advance. If you can afford it, make a larger payment.
  2. If you find it difficult to keep up with your payment schedules, you can opt for direct deposits or debit arrangement with your bank.
  3. Update your contact details, particularly your residential address, with your lender.
  4. Avoid applying for payday loans from one too many credit lenders
  5. Only apply for loans or credit cards in times of need

You can also adopt these steps when you want to further improve your credit rating, even if you don’t have a bad credit history. This ensures that you get that positive credit score the soonest way possible.

How to get financial help on bad credit

Should you need financial assistance immediately, don’t let a bad credit score get in the way. Even if you don’t have that positive credit score yet to back you up, you can get financial help from reputable lending institutions that offer quick personal loans for people with bad credit.

Perfect Payday, for example, can help you get access to the funds you need. The company offers bad credit loans for customers with poor credit ratings, without requiring any asset or security as collateral.

Getting help from Perfect Payday for an unsecured quick loan can also help repair your credit rating. When you pay your dues on time or in advance, this will be reflected on your credit history, which in turn, boosts your credit rating.

When the time comes that you need a larger loan from another lender, they will refer to your credit history and base your assessment on your good credit behaviour.

To know more about positive credit ratings and how Perfect Payday can help you, contact Perfect Payday today to get a quick assessment.

About the Author

Lucy has over a decade of experience in finance. She is currently the content curator here at Perfect Payday.

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