Sweeping changes to credit reporting

Photo / NZ Herald

The Privacy Commissioner is today expected to announce sweeping proposals to change the way credit information is reported, including allowing credit agencies to collect and use a person's driving licence number to match up information on them.

The proposals, in an information paper on an amendment to the Credit Reporting Privacy Code 2004, would allow credit agencies to collect information on the type of credit account a person has, the limit on each account, who is providing the credit and the status of the account.

Now credit agencies can only collect information on credit defaults, judgments and bankruptcies, data considered to give only a "negative" picture of someone's credit history.

The commission states in the paper that the new proposals are said to provide benefits including a more complete picture of a person's creditworthiness - allowing the likes of banks and finance companies to make better assessments of their lending risks, the tailoring of credit products and the potential to open up credit to some people who might have been previously excluded because of a lack of information about them.

It is also hoped the changes will allow identify theft and fraud to be better identified through monitoring unusual behaviour.

But the commission admits there are risks to the consumer.

"The collection and reporting of more personal information creates increased risks of inaccuracy and misuse," the report states.

To counter those, the commission is proposing additional safeguards to control the flow of information including the use of driver's licences to match credit information, a ban on using credit information in direct marketing and making credit reporting agencies get an independent assessment of their systems.

"Requiring credit reporters to be more transparent about the results of their systematic reviews, making them more accountable, will strengthen the monitoring obligations and give both the commissioner and the public greater confidence in the security and accuracy of the processes."

The extra credit account information would also be limited to registered financial service providers, blocking some groups like landlords, prospective employers and insurance companies from access to the information.

Changes to allow the driving licence information to be collected would come into force by next April, with the comprehensive credit reporting proposed to start by April 2012.

Credit agency Dun & Bradstreet welcomed the changes. Its New Zealand general manager, John Scott, said the proposals were an improvement on what had become an outdated system.

"There is overwhelming evidence... that more data can lead to improved credit decisions that benefit consumers and lenders."

He said consumers, small business and credit providers would all gain.

People have until August 13 to make submissions to the Privacy Commissioner.

Credit check:

New personal information credit agencies will be allowed to collect:

* Type of credit account - mortgage, personal loan, credit card.

* Credit limit.

* Credit provider.

* Status of account.