Commonwealth limits credit checks
Commonwealth Bank continues to loosen its lending criteria in the consumer market, with the bank routinely waiving standard credit checks for a substantial minority of home loans advanced to its existing customers. A report by Standard & Poor’s shows that the bank is dispensing with standard credit checks from Baycorp on 40 per cent of new home loans. A credit check with Baycorp – the successor to the old Credit Reference Association of Australia – remains a standard check on most home loan applications at most lenders. Commonwealth Bank takes the view that its can make a satisfactory credit assessment on the creditworthiness of new loans to its own customers on the basis of the bank’s own database, and that the external credit check from Baycorp provides insufficient value to the decision making process. Another controversial, though not yet common, initiative at CBA is to undertake “desktop” rather than traditional valuations of security properties on some residential mortgages.