It has been nearly a month since the deadline for the major banks to share 50% of their credit information as part of the rollout of comprehensive credit report (CCR), but some lenders have been sharing data for much longer.
One such lender has explained to Australian Broker why more banks involved in CCR will create better outcomes for the customer and what it means for brokers.
The new credit reporting regime was made compulsory back in June and the four major banks had until 28 September to share 50% of their credit information.
CCR will allow all participating lenders to share and view consumer credit data to provide a clearer view of a consumer’s credit profile and history.
Founder and CEO of personal loan provider MoneyPlace, Stuart Stoyan, said they had been sharing data with CCR for around two years and were able to offer customers better rates because of that.
He said: “We look at the same information a traditional lender would have on a borrower, such as their credit file, along with a wide range of non-traditional data that enables us to determine a personalised interest rate for the borrower.
“CCR data for has helped our borrowers save a couple of thousand dollars on an average sized loan, with interest rates coming down a couple of percentage points. What we’re seeing overall is this is driving great results for consumers.”
While it is used by lenders to assess a customer’s credit-worthiness, CCR will also impact the role brokers play when dealing with customers.
Not only are some banks sharing data while others are not, banks like the big four are only sharing 50% of the data until next year. This makes the landscape a bit more difficult to navigate for customers who do not know where their best rate will be.
Stoyan said, “From a broker perspective it’s really important to understand the difference between lenders and whether or not they’re using CCR information or not.
“For a lender like MoneyPlace, because we’re using CCR information, 9 times out of 10 we’re offering a better rate than we would have otherwise.
“This will help brokers get a better rate for their borrowers. It also means the information is provided in the credit file, so typically we also see applications take less time to process. The upshot is therefore that borrowers get a cheaper rate, borrowers get the loan faster, and borrowers are much, much happier.”
Stoyan said MoneyPlace has seen a rise in the number of brokers looking for personal loans thanks to its relationship with Liberty, after the group acquired it in January.
He added, “Off the back of the Liberty relationship a MoneyPlace personal loan is now in the brokers toolkit and we’re seeing some really savvy brokers using it to help their borrowers, post-mortgage or pre- mortgage. That means brokers are creating better outcomes for their customers.
“We’re seeing personal loans are now being used by brokers to be able to help people fund a home renovation after they have moved into their house and maybe they can’t increase their mortgage. Also we’re seeing brokers help their clients consolidate debts into a single MoneyPlace personal loan to clean up their finances ahead of applying for a mortgage.”
Over time, more information will be shared by the bigger banks and other lenders are expected to contribute more information.
Stoyan said this will create a “richness” of information which will enable better offers for customers and better opportunities for brokers.
He added, “As this information becomes richer you’re going to see much more rapid decision making process with lenders better able to assess a borrower.”