Introducing CCR: The broker’s role

by Rebecca Pike03 Aug 2018

The new comprehensive credit reporting (CCR) will save brokers time and help build better customer relationships, according to the peak body for organisations involved in credit reporting.

CCR is changing the way lenders will view potential borrowers’ credit worthiness and eligibility for a loan.

Proposed legislation from the government will require major banks to share comprehensive credit information for least 50% of their customers by the end of September. This will include information about the customers’ payment history going back to at least April 2018.

The comprehensive credit information for the remaining 50% of customers will have to be shared by September 2019.

While not compulsory, once the major banks start sharing, it’s likely that most other banks and lenders will start sharing comprehensive credit information as well.

Previously, a report would show a person’s credit applications, defaults (i.e. payments that are at least 60 days overdue) and insolvency and court data.

The new CCR system will show all this information plus information about the credit accounts that the customer has taken out, including the date the account was opened, the type of credit, the available credit limit and the date the account was closed. This information stays on the report while the account is open and for 24 months after it is closed.

For those credit providers participating in CCR and which hold an Australian Credit Licence, it will soon also include up to 24 months repayment history. This is a monthly record of whether the minimum payment was made on time (although a 14-day grace period applies to the first payment that is missed).

The new information means brokers and lenders will have a better understanding of a borrower’s credit history and will reduce the risk of borrowers forgetting to include other accounts, or not realising they still have open accounts.

Rebecca Murray, general manager, business development & membership at, the Australian Retail Credit Association (ARCA), said, “The system will be fairer going forward, it’ll be more based on people’s actual and recent payment history and existing credit arrangements rather than some default they had in the past.”

She added that brokers will play a pivotal role in navigating the new system for customers, as the changes mean lenders could make different decisions on borrowers than they did before.

Customers who were previously considered prime loan customers may now not qualify because the lender can see new information such as other types of credit and repayment history.

It may also mean customers who were not considered prime customers before are now able to take out credit.

Brokers will be able to access their customer’s credit report and make a better decision on which lender is right for their customer with that information.

Murray, who has been part of a panel focusing on CCR at Pepper Money’s roadshows, said this should save the broker time with applications.

She said, “From a broker’s point of view, it means they won’t waste as much time putting out applications to a lender where they might get a decline because the broker knows the same amount of information that the lender knows.

“I think the broker’s going to play a really important role because they’re there to support the customer and they can help a customer at a critical time when they’re anxious about getting a loan in a certain time frame.

“They’ll be able to help them understand why they’re not going to be able to get a prime loan and identify a more appropriate lender for them given their credit report.

“The process of buying a home can be very stressful to a customer, especially first home buyers. The broker can help build trust by showing the customer exactly what’s on their credit report and explaining what it means to their loan application.

“For those customers who may have a poor credit history and can’t get the loan they want, the broker can guide the customer on what they can do to rebuild their credit history so that they’ll be in a position to buy their home in the medium term, without resorting to expensive and usually ineffective credit repair companies. It’s a really important role.”

 

Related stories:
Banks agree to CCR protections
Brokers urged to use data for better outcomes
Brokers urged to help combat fear about CCR