New Zealanders' credit records are set to be open to more detailed scrutiny - including whether credit card, mortgage and bill payments are made on time every month.
Privacy Commissioner Marie Shroff has today made public proposed draft amendments to the Credit Reporting Privacy Code that will allow much more information to be collected about New Zealanders' borrowing.
And she conceded that would come at a cost to privacy.
"There is no doubt that this would be a more intrusive regime, but I have tried to ensure that there will be benefits to individuals and the community, as well as to business interests," she said.
At present, credit agencies have access only to mostly "negative" information about borrowers, including when they have not made repayments on time or defaulted on a loan.
Since credit reporting was regulated in 2004 by the code, the agencies have been lobbying to be able to collect "positive" information, such as repayment histories.
Ms Shroff said the changes would give credit agencies, which are consulted when anyone applies to lenders for credit, a "more complete picture of an individual's credit worthiness".
The credit industry says the changes will result in more responsible lending and cheaper credit for those who make repayments on time.
The managing director of credit-checking agency Veda Advantage, John Roberts, said the changes would "quietly underpin the economy as it climbs out of recession".
"Lenders will be more confident in lending money when they have been able to make more-thorough assessments of a borrowers' ability to pay," he said.
But Ms Shroff said only time would tell whether that would eventuate.
"They have argued for this, now we want to see whether it does produce a beneficial effect," she said.
One sceptic is Council for Civil Liberties spokesman Batch Hales.
He was "very suspicious" of the industry's claims, and said the collection of such information, despite attempted safeguards, posed a risk to consumers' rights.
"It's not a transparent system ... You ask any ordinary person around New Zealand what their credit rating is and they'll look at you quite blankly.
"They don't even know that this process exists, and they don't know how to challenge it."
But Ms Shroff said access to the information would be restricted to credit providers that were subject to independent dispute-resolution schemes.
The amendments will prohibit listing defaults under $100 and allow the collection of repayment information for only the previous two years.
Providers will also be subject to increased auditing, and people will be able to see their records and complain to the Privacy Commissioner if they feel unfairly treated.
The changes have the support of the Federation of Family Budgeting Services, which believes they will allow rehabilitation of unnecessarily poor credit ratings.
Chief executive Raewyn Fox said many people took high-interest loans from fringe lenders after their access to mainstream credit was cut off.
"One stuff-up and it follows them for years ... We see lots of situations where people apply for a mortgage and forgot that they moved out of a flat and didn't pay the final power bill six years ago."
The amendment is consistent with proposed changes in Australia, and is similar to credit reporting in the US.
It builds on changes made last December allowing the precise amount of credit granted to individuals to be recorded.
Ms Shroff said feedback on the proposal, due by June 24, was crucial to know whether "the balance struck is the right one".
She hopes the proposed change to credit reporting will strike a blow against identity fraud.
The amendment will introduce "credit freezing" for people who suspect they have become vulnerable to fraud.
"If you know you've had your details stolen, or if you've lost your wallet or something, you can ring up ... and get a freeze put on your record," she said. "That means anyone pretending to be you won't be able to take out loans or incur major expenditure without it showing up."
The change has the support of North Shore man Michael Newby, who fell victim to identity fraud after his car was broken into and his wallet, chequebook and driver's licence were stolen.
Although the theft was reported to the police and the bank, someone later used Mr Newby's licence to register a car in his name, borrow almost $3000, and withdraw $11,000 from his bank account.
For three years, fraud was repeatedly committed in his name, until police caught the offender.
Mr Newby said the experience had been an ordeal for him and wife Sherene, and he backed any measures that might help others put in a similar situation.
"It never ended. There were debt collection agencies ringing up and asking for first payments on lounge suites and televisions that I had supposedly bought.
"They don't just steal $20 out of your wallet nowadays. They steal who you are."