Know your score: Is consumer awareness increasing as CCR kicks into gear?
After Australia’s Comprehensive Credit Reporting (CCR) scheme was launched back in 2017, banks began sharing positive customer data with bureaus like Experian. With access to a much larger picture of a customer’s financial behaviour - from how well they meet repayments, to their defaults and general account activity - lenders were empowered to make far more informed decisions. And as a result, consumer credit scores began evolving.
But Australians, for the most part, had little idea it was happening.
Experian’s first Know The Score report in 2017 found that the majority of the country was in the dark about what their credit score is, what it affords them and how their financial behaviour impacts it. In 2017, the numbers were staggering - 71% people had never checked their credit score. This improved to 65% in the 2018 Know The Score research, but many still had no idea how CCR’s positive data was impacting their next credit application.
Awareness is vital as CCR reaches its final stages
In September 2019, the country’s big four banks shared their full portfolios of credit data with Experian, giving lenders the opportunity to take full repayment histories into account when deciding whether or not to approve a credit application. As we’ve received more and more data, credit scores have become more and more accurate, with the potential to provide consumers access to more competitive deals and interest rates.
But in terms of Australian awareness and financial literacy, have we improved over the last 12 months?
Awareness around credit scores has increased, but there are still missed opportunities, and areas where Australians can do more to make the most of their credit standing.
What can you do to improve your score?
Knowing your credit score, and how your financial behaviours impact it, is important if you’re looking to apply for or maintain successful credit opportunities in Australia. But how exactly can you take control? Here are 3 core ways to look after your credit:
|1||Meet your repayments on time - Your future credit score depends on how diligently you pay your mortgage, loan and credit card debt. Just one late payment can be detrimental.|
|2||Regularly check your credit report - As more and more positive data is taken into account, your credit file will evolve. It’s important to check that this information is correct and understand where you stand before applying for credit. You can do this free of charge with Experian, or by creating a free credit profile with Experian partners like Credit Savvy to help monitor your Experian credit score and report.|
|3||Avoid multiple late payments - One late payment may result in a drastic drop in your credit score, but consecutive late payments or significantly late payments are the most damaging to your credit rating and could impede your ability to get credit in the future.|
To check your Experian credit report, learn more about credit scores and the impact of CCR as well as how to look after your credit health, visit our Education Hub. You can also visit the Australian Retail Credit Association (ARCA) CreditSmart website. This resource was created and supported by credit experts to help customers understand how reforms like CCR affect their credit standing, what credit providers can access and how you can control that information.
About the research: Survey conducted via Polefish in May 2019 using online surveys. The survey was completed by 1,000 Australians representative of the nation as a whole aged 18 and over.
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