In Australia, around 50 lenders, including all major banks, use ‘comprehensive credit reporting’. This means both negative and positive information is included in your report, painting a clearer picture of your credit history.
This is a good thing. If you have the ability to take out a car loan, you’re less likely to be held back by one or two negative slip-ups from the past because the lenders will see a more balanced story of your borrowing history, including all the times you DID make payments on time!
Comprehensive credit reporting is mandatory for all lenders by 1 July, 2021.
Plenti uses comprehensive credit reporting AND risk-based pricing to determine the right interest rate for your loan. Rather than focusing on any black marks from the past, we understand your full credit history, including good financial behaviour, such as making loan repayments on time. This means we can offer you a personalised interest rate that matches your true credit history and suits your current circumstances.
What is risk-based pricing?
Plenti uses risk-based pricing to set the overall cost of your loan. This is good news for you! Risk-based pricing assesses multiple factors, including your full credit history, income and debts, to determine an appropriate interest rate for you.
This means if you’re a trustworthy borrower with a positive history of making repayments on time and sticking to your loan terms, you will be rewarded with a lower, more personalised interest rate.
The reverse is also true. Risk-based pricing means that borrowers who have a poor credit history, other debts, and/or an unstable income will be charged higher rates of interest. This is because the lender views them as being less likely to repay their loans in full and on time.
How is it calculated?
When applying risk-based pricing, your lender will look at a many factors to make sure they have a clear picture of your financial behaviour and habits, including things like your:
Income and expenses
Presence of a guarantor
A steady residential address
Comprehensive Credit Reporting (CCR) allows for more accurate risk-based pricing. Consider applying with a lender who participates in CCR and you will be rewarded for your positive financial habits, like making repayments on time.
How can I find my credit score?
You can get a copy of your credit report and credit score for free every 3 months. Check your credit report for free by contacting one of these credit reporting agencies:
Equifax: phone 138 332
illion: phone 132 333
Experian: phone 1300 783 684
Simply call to get your credit score on the spot or access your report online within a day or two. You could have to wait up to 10 days to get your report by email or mail.
Alternatively, you can find out your credit score online for free through government financial guidance site Moneysmart, or financial comparison sites like Canstar.