This month, banks have been forced to implement two major changes that will impact our abilities to get a loan.
Open Banking and Comprehensive Credit Reporting are being forced on the banks to improve the way data is used by and for borrowers.
Open Banking has already been implemented in the UK and Europe where regulators ordered banks and credit card companies to share customer data with other companies if their customers agree.
In Australia, the 2019-20 financial year has kicked off with the launch of the open banking regime.
The changes are meant to encourage switching and comparison in banking but it also has the potential to disrupt how banks operate and make it easier for rivals to compete.
One way of doing this is by giving software developers and fintechs access to a financial institution’s data to build and improve financial services and to compete against the banks.
Australia has been moving towards Comprehensive Credit Reporting for the past five years. This month lenders are set to learn a lot more about borrowers, with banks required to share more data on applicants than ever before.
The full implementation of comprehensive credit reporting next month means everyone’s credit score is likely to change.
Prior to March 2014, only negative credit events were shared between institutions.
This meant borrowers’ positive credit histories weren’t always taken into account when they were assessed for a loan.
Negative events included late repayments, defaults, bankruptcies and court judgments, but also the number of credit cards borrowers had or had applied for.
Positive credit reporting started in 2014 these include regular payment histories, what accounts borrowers have, and what types of credit they use.
Starting July 1, banks will have 90 days to share 100 per cent of the positive credit events with other financial institutions, giving lenders a more complete view of applicants’ financial history.
If you want to learn more about these changes and how they impact your ability to get a loan, please contact your C&N broker.
Aside from access to the best mortgage rates, have a look at our other accounting and advisory services that we do to help you achieve greater financial success.
Chan & Naylor Group have national offices in North Sydney, South West Sydney, Sydney, Pymble and Parramatta in New South Wales, Melbourne, Moonee Ponds and Hawthorn in Victoria, Brisbane and Capalaba in Queensland, and East Perth in Western Australia that can help you find the best mortgage rates. Contact us today.