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EXPERT SPOTLIGHT
Pepper Money: Simplifying lending By using data from comprehensive credit reporting, Pepper Money is able to personalise its service for customers. Neil Culkin, the non-bank’s head of credit and settlements – mortgages and personal loans, explains how
MPA: We’ve been hearing about comprehensive credit reporting for a while now, but can you explain a bit about what it means for those who are still unsure? Neil Culkin, Pepper Money: Credit reports contain information that helps lenders like Pepper Money assess the risk of lending money to customers. In the past, a customer’s credit report mainly showed ‘poor’ credit behaviour, such as the number of times they had applied for credit, had been declared bankrupt or had defaulted on prior loans. Comprehensive credit reporting (CCR) or ‘positive reporting’ provides additional information on loans that the applicant has, or had, and the actual repayment histories of those loans. This information now demonstrates ‘good’ and ‘bad’ credit behaviour on a customer’s credit report. This new information makes it easier for some people – or for others, harder – to obtain credit or a loan. It allows lenders to lend more responsibly and helps credit assessors make more informed decisions. Under CCR, all the ‘negative’ behaviour remains on the report; in addition, any information about the credit accounts that the customer has taken out, including the
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date the account was opened, the type of credit, the available credit limit and the date the account was closed. This information stays on the report while the account is open and for 24 months after it is closed. This new information will contribute to the customer’s credit score, improving for those who may have been diligently paying
to take out credit at a better interest rate. Pepper Money supports positive credit reporting because it makes it fairer for the customer and reduces effort for the broker. The customer’s credit score is based on their actual and recent payment history and existing credit arrangements rather than whether they have had a default in the past.
“As more lenders join the regime, through choice or via regulation, more customers’ credit history becomes available, simplifying the lending process for everyone” Neil Culkin, Pepper Money off existing debts. Conversely, a customer’s credit score may be negatively impacted where they may have missed payments. The result is that some customers who were previously considered prime loan customers may now not qualify because the lender can see new information such as a poor repayment history on existing loans. Customers who were not considered prime customers before may now be able
As more lenders join the regime, through choice or via regulation, more customers’ credit history becomes available, simplifying the lending process for everyone.
MPA: Where are we at with CCR at this point in the timeline? NC: Currently, there are about 50 lenders participating in CCR. Pepper Money began participating in the regime two
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