The recent changes to how banks calculate credit scores could give a more detailed picture of a borrower's creditworthiness, according to an analysis by PRDNationwide.
Under the changes, lenders are now required to report good financial behaviour.
"Previously, your credit rating was a bit of a pessimist, only focusing on the negatives like bankruptcies, payment defaults, loan knock-backs and court orders. It had a real glass-half-empty feel to it," PRDNationwide said.
This is a positive thing, especially for those borrowers who struggled financially over the past years and have already turned over a new leaf, according to the analysis.
"So if you had a financial rough patch a few years ago, maybe you were between jobs, and defaulted on a loan repayment, it may no longer weigh as heavily on your overall credit rating," PRDNationwide said. "If you have been a good saver and always make your credit card repayments otherwise, this could mitigate the damage done by that one missed payment."
On the other hand, the new rules might put those with consistently tainted credit history in an even worse position.
"If you have multiple credit cards and regularly miss repayments, you may find yourself with a reduced credit rating after these changes take effect," PRDNationwide said.
PRDNationwide said these changes would help lending institutions better assess their potential borrowers.
"Lending institutions may now feel more comfortable lending to or refinancing the loan of someone who previously had a less-than-perfect credit history," it said.