If you’re thinking about applying for a personal loan with NAB, it might be time to get your credit history in order because they’ve just become the first major bank in Australia to welcome Comprehensive Credit Reporting (CCR).
NAB customers will now have the chance to fairly prove their credibility to the bank when applying for a personal loan, overdraft or credit card.
CCR refers to new legislation which requires banks to take into account a customer’s entire credit history - both positive and negative - to provide a rate that accurately reflects their reliability as a borrower.
Previously, credit files have only detailed negative information, such as a loan default or a failure to pay bills on time.
“Under CCR, we’ll now have a more holistic picture of a customer’s credit situation, so we’re better able to make sure our customers receive the right type and amount of credit for their individual circumstances,” said NAB Chief Operating Officer, Antony Cahill.
While the official start date for CCR isn’t until July, the move by NAB may stir up competition among the other big banks, pushing them to adopt the new system earlier than anticipated.
According to the new legislation, the big banks will be required to provide 50% of the CCR data to credit bureaus by July 1, before increasing this to 100% within the next year.
“We’ve taken a leadership position on comprehensive credit reporting since the start, because we believe it’s good for competition, and will mean better outcomes for customers,” said Cahill.
As CCR slowly comes into effect, Aussies can now start gearing up for a system that will play to their advantage as, according to Treasurer Scott Morrison, the banks will now have to work harder to seal the deal with customers.
"Customers with good credit histories will be able to obtain lower rates, and be better placed to shop around because their credit history will now become available to all lenders," he said.
"For borrowers, this regime should lead to one thing - a better deal on your mortgage, your personal loan or business loan.”
And as the banks slowly move towards a more consumer-friendly application process, customers can still do their bit to guarantee themselves a better rate by working towards amending their credit history.
So if you’re thinking of applying for a personal loan in the future, here are a few tips to give your credit history a clean up:
- Close old accounts - We all clean out our wardrobe from time to time, but it’s time to do the same with your old financial products. This includes credit cards or bank accounts, as all open accounts look like potential debt to a lender.
- Don't touch your plastic - It’s better to avoid using your credit card to pay for bills because this will throw you into more debt.
- Take care of any outstanding debt or fines - If there’s an overdue bill or fine, pay it as soon as possible. Overdue payments do not sit well with lenders as they could deem you as a risk who may default on repayments.
- Mum's the word - When it comes to credit enquiries, everything is recorded, even if you decided to withdraw the application. So you might be better off holding off until you’ve done your homework and are sure on the right provider for you.
But you don’t have to wait for your bank to introduce CCR to apply for a personal loan, you can head over to our personal loan comparison tool to check out some of the latest deals.