A new emerging credit regime has been tipped to produce faster turnarounds and better scorecards – but first lenders need to commit.
Heritage Bank and MyState Bank both told Mortgage Business that few lenders have started providing comprehensive data, despite widely welcoming the new credit regime that was introduced in March 2014.
That limited take-up has prompted the Australian Retail Credit Association to propose new principles that would expand credit data sharing, as Mortgage Business reported yesterday.
MyState’s head of broker services, Sandi Sims, said lenders have only been providing positive reporting data sporadically because the system is still voluntary.
Ms Sims said she expected this take-up to progressively increase, and also noted that it would take time to build an accurate and in-depth history on a client’s credit conduct.
“At MyState, we are currently overhauling our loan processes as we progress to online operations for an even better customer experience,” she said.
“Using comprehensive credit reporting in addition to increased automation moving forward will result in improved operational efficiencies for us and a quicker time to ‘yes’ for our customers.”
Heritage Bank’s head of credit, Michael Curry, said the bank was working towards comprehensive credit reporting and expected to be able to participate from early next year.
Mr Curry said that his conversations with other financial institutions suggested that it would be another two years or so before comprehensive credit reporting became mainstream.
“The additional data that is going to be available will enable lenders to redevelop and make their scorecards more accurate,” he said.
“It will also enable a fair bit of streamlining when it comes to back-end operations such as verification – there won’t necessarily be the same need for lenders to be seeking statements off customers.
“So, overall, it should provide better outcomes for customers, and accelerate the process.”
Comprehensive credit reporting would remain voluntary under the new framework proposed by the Australian Retail Credit Association.