Code Amendment #5

Significantly improved credit reports are on the way with the staged introduction of changes to the information held on individual credit files.

In the first stage, coming into effect on 1 October, credit reporters will be able to hold drivers licence numbers for matching.  This will support existing processes to match individual files with incoming data.

This step, to provide for improved matching, signals the start of moves to bring New Zealand's credit reporting regime into the 21^st century.   The changes have been approved by the Privacy Commissioner.

The next stage is heralded by the release (this week) of Amendment 5 to the Credit Reporting Privacy Code 2004, the Code of regulations, which the Privacy Commissioner has issued to regulate credit reporting.

Veda Managing Director John Roberts says the move to comprehensive reporting, which the Amendment contains, will bring major improvements which can deliver for consumers.

"Over time credit reports will include positive information about individuals and their ability to pay off loans.  Credit reports will provide lenders a fuller picture of an individual's financial situation."

Major work is in progress by credit reporters, banks and finance companies to prepare to share the positive data, which is to be permitted from 1 April next year. 

They will be permitted to provide five new areas of data, which will be included in credit reports.  These areas of data are:

1. Type of credit account
2. The credit limit
3. The credit provider
4. The status of the account as open or closed
5. Repayment history.

The Privacy Commissioner detailed the first four changes earlier this year in Amendment 4 to the Code and Amendment 5, permits the inclusion of repayment history. 

Mr Roberts says New Zealand is now on the way towards a comprehensive credit reporting environment that, within two years of implementation, is poised to deliver significantly greater access to credit for groups of New Zealanders which have previously been marginalised by the lending industry.

Overseas studies revealed that minorities and women were able to have improved access to quality credit after the introduction of similar reform.

Other aspects commented on were an improvement in competition and in the ability to bargain based on your good payment history.

"More detailed credit reports should allow people who have defaulted on loans, but then improved their financial situation, to rehabilitate financially and access credit sooner."

"During a period of time when credit is tight this is a welcome reform for New Zealanders," Mr Roberts says.

"While the changes will take some time to bed in consumers can be confident the financial sector is moving to make the investments required to implement these changes."