More accurate credit picture welcomed

The New Zealand Bankers’ Association has welcomed changes to credit reporting in New Zealand that take effect from 1 April 2012.

The most fundamental change is that information held by credit reporting agencies will include up to 24 months of an individual’s repayment history. This includes both payments and defaults. Until now only defaults, or missed payments, have been recorded.

“This is great news for bank customers as it provides a more accurate and complete picture of their repayments history, and will allow banks to make faster and better credit decisions for customers,” said New Zealand Bankers’ Association chief executive Kirk Hope.

Comprehensive credit reporting includes both ‘positive’ and ‘negative’ repayments information. “Customers who have met all their credit obligations, for example credit card, phone and power bill payments, will be able to demonstrate this when applying for a loan. Previously they might have had no credit history to support their application. Their positive payment history will now form part of their story,” said Hope.

The benefits of comprehensive credit reporting will build over time as credit providers opt into the initiative, and individuals’ credit profiles develop over the next few years.

The changes to credit reporting were introduced by the Office of the Privacy Commissioner through an amendment to the Credit Reporting Privacy Code. More information is available here.