iscover 
The industry association for credit reporting said credit health can often go under the radar in a tighter economy, despite its central role in lending decisions.
Arca said brokers are uniquely positioned to identify risks and support clients as they navigate refinancing, renegotiation, or new credit applications.
Eliza Twaddell, general manager of policy and stakeholder engagement at the Australian Retail Credit Association (Arca), said rate rises should prompt borrowers not only to recalculate repayments, but also to review their credit health before making any moves.
“When brokers know if they have a client with a great credit report, they’ll be in a better position to get more loan offers and to get better rates,” Twaddell said.
“In a difficult rates environment, you don’t want to pull your credit report just as you’re ready to apply for a loan and realise there’s a problem.
“If brokers can get people into the habit of considering their credit report, not only does it give them the chance to identify problems early, but it also sort of supports positive behaviour.”
Despite the importance of credit health in loan assessments, Arca said nearly half of Australians have never checked their credit report.
“It’s a busy world,” Twaddell said.
“I think the conversation is definitely improving, and we’re seeing consumers becoming increasingly engaged with credit reporting. But there’s still a lot of misconceptions and nervousness about credit health.
“That’s where we see brokers as a really important part of that ecosystem. They have a trusted relationship with their clients, they have good skills in communicating things to people who don’t necessarily have the background in them. For us that’s a perfect in.”
Getting a full picture
Credit reports remain one of the primary tools lenders use to assess and price risk. Even minor inaccuracies, outdated listings, or poorly managed credit inquiries can materially affect borrowing costs over the life of a loan.
Twaddell said common hits to credit health include errors that go unnoticed by consumers, repeated missed payments, and overapplying for credit.
She added that comprehensive credit reporting has helped consumers in a rising rate environment by sharing both positive and negative credit data, providing a more complete picture of a borrower’s creditworthiness.
Arca’s latest report found that more than half of consumers were seen as a lower credit risk once lenders factored in comprehensive data, with one lender finding the process would have allowed it to approve 90 per cent of previously rejected applications without increasing defaults.
More than half of consumers are seen as lower credit risk once comprehensive data is included.
“In times when rates are on the rise, comprehensive credit reporting has really changed the picture because it allows people multiple avenues to improve their credit health,” Twaddell said.
“It allows for more of a credit spectrum, rather than a bucket of bad clients and a bucket of good clients.”
Twaddell emphasised that brokers can influence client outcomes through early conversations about credit health.
“Brokers can encourage their clients to look at their credit score a couple times every year, as well as sitting them down to talk through what’s in there and what’s important,” she said.
“Have the conversations early, about what is in the report and what can be fixed. The beauty of comprehensive credit reporting is that positive behaviours improve your credit health.
“Even if your client’s credit health isn’t as good as they’d like it to be, brokers have a big opportunity to show them how to improve it.”
[Related: How are lenders really performing? Brokers asked to speak up]