In 2012 the Credit Reporting Privacy Code 2004 (the Code), which is the regulation governing consumer credit reporting in New Zealand, was amended by the Privacy Commissioner to introduce comprehensive credit reporting. Comprehensive credit reporting changes the type of consumer credit information that can be collected by credit bureaus and used by credit providers when making a credit decisions. This change came into effect on 1 April 2012. A copy of the Code may be downloaded from the Office of the Privacy Commissioner’s website: www.privacy.org.nz
Previously New Zealand had a negative reporting system. This meant consumer credit reports could only contain information such as credit enquiries (typically applications for credit e.g. a personal loan or credit card) or the fact a particular credit provider or collection agency had loaded a credit payment default. Under the new comprehensive credit reporting system positive data is able to be included on credit reports and provided to eligible groups - this will provide a more balanced view of an individual’s credit history. Many developed countries in the world operate under a comprehensive credit reporting system already.
The positive data that can be included on credit reports includes account information such as the date an account was opened and closed, credit limit, type of credit account, as well as 24 months credit repayment history. Repayment history information can only be provided by and accessed by certain agencies. Those agencies are;
- Registered Credit Providers (i.e. Banks, Finance Companies),
- Telecommunications providers,
- Retail Gas and Power Utilities and;
- Insurers (for defined purposes).
As a consumer, you can access and view all information held in your credit file including any positive data that has been submitted.
Industry rules around data, standards and sharing may further limit those organisations that may access positive data.
Repayment history can provide valuable insight into the dynamic nature of account repayment history.
From a credit provider perspective, this information can alert credit providers to current hardship or financial struggle and ensure a customer isn't further indebted without having sufficient capacity to repay their financial commitments - hence avoiding further financial stress for the individual.
The comprehensive credit reporting system gives New Zealanders more power to demonstrate credit worthiness and manage their credit profile.
- Highlights good credit behaviour: You will be able to demonstrate recent good credit behaviour because the Comprehensive Credit Reporting system records if you have made your credit payments on time.
- Faster recovery from adversity: You may improve your credit profile more quickly after an adverse financial event by showing good credit behaviour, potentially countering the impact of a default which may be up to five years old.
- Quicker to establish a credit report: For individuals new to consumer credit, the use of comprehensive information means that you can build credit worthiness more quickly. For example, if you are a young person or a recent arrival from overseas.
- A more balanced system: It is a more balanced and transparent system for consumers who already have a good credit history, as well as those who previously had trouble meeting their financial commitments – as it may enable them to access quality credit where they may not have been able to previously.
- A better deal with providers: With more complete credit bureau information and monthly updates, having a credit profile and showing good credit behaviour may become important in accessing credit at the best price.
From a consumer perspective, this repayment history could demonstrate whether current and/or recent financial commitments have been met or not. In an instance where a consumer, for example, loses their job and the situation results in payment defaults being loaded onto their credit file - these payment defaults remain on their credit file for five years.
Repayment history gives the consumer the ability to demonstrate they have rehabilitated their credit behaviour and facilities e.g. home loan, credit cards, personal loan etc. by showing a clear repayment history over a period of up to 24 months. This may then allow consumers' access to quality credit (assuming sufficient capacity to repay) notwithstanding the presence of payment defaults.
As it will take time for this new credit data to build up, the above benefits are likely to take some time to evolve.
From 1st April 2012 additional information was permitted to be collected, held and disclosed by credit bureaus. Once this data has been supplied by credit providers, your credit history will include positive information such as:
- Type of credit account i.e. credit card, home loan etc.
- Amount of credit extended (limit) e.g. $5,000
- Capacity of individual (such as account holder, joint account holder or guarantor)
- Status of account (Date account opened/closed)
- Details of credit provider i.e. the name organisation / business the account is with
- 24 months repayment history
This is in addition to the existing negative information on your credit report such as:
- Personal details – name, address and date of birth
- Credit inquiry details
- Overdue debts like Payment Defaults (paid and unpaid)
- Court judgments
- Insolvency data
- Records of any ID reported lost or stolen
There are now more reasons to actively manage your credit profile so that you are well positioned under the new Comprehensive Credit Reporting System. You can track your credit reporting information through My Credit Alert product (this is a 12 month subscription) which includes your credit report.
In addition, you are also entitled to get a copy of your credit report for free (to be supplied within 10 business days) or if you require this more quickly for a modest amount (to be supplied within 3 business days) – you can find out more on our Products page.
1. Credit providers (these include: banks, finance companies, electricity retailers, gas retailers or telecommunications service providers) can access your credit file for the following purpose:
- Opening a new loan/account. We call this access: Account origination
- Managing your account (i.e. an increase to a loan or when reviewing your current credit card limit etc.). We call this access: Account management Access.
- When you haven’t met your payment obligation. We call this access: Account Management Collections.
2. A prospective insurer that is a registered insurer may access your credit file for the purpose of a decision on the underwriting or continuation of insurance in respect of a credit related transaction relating to an individual. They will see positive and negative data (even if they do not supply any positive data).
3. An example of what these other companies would be able to see is as follows:
Let’s say you have the following accounts:
A credit card with Bank A (who supplies positive data)
A home loan with Finance Company B (who does NOT supply positive data)
A phone account with Company X (who supplies positive data)
In this example, Bank A will be able to see the positive CR data Company X have supplied & vice versa.
Finance Company B however will only be able to see negative information and none of the positive CR data Company X and Bank A have reported.
Effectively what this means is: if the company provides positive data, they will see negative & positive data in return. If the company does not provide positive data, they will only see negative information when viewing your credit file.