Changes to Credit Reporting Code

6 October 2011
 
The cost of borrowing money may come down for some people under new credit rules.
But consumers will have to give up much more of their personal financial information to borrow money under sweeping changes to the credit reporting law next year.

Lenders have told the Privacy Commission that more information about a borrower's payment history would allow them to reduce interest rates to customers with a good record.   There was evidence overseas to support that argument, Privacy Commissioner Marie Shroff said.   From April, banks and other providers of credit or lending, including power and insurance companies, will provide full details of payment histories on all their customers, to credit reporting agencies.
Until now only adverse credit information such as bad debts have been allowed to be collected to make up an individual's personal credit report.

The changes follow a review of the Credit Reporting Privacy Code by Privacy Commissioner Marie Shroff, who said the disclosure of both good and bad bill-paying habits should lead to better lending practices and make credit available to more people at lower interest rates.   The new rules would affect almost everyone and mark the start of a new more comprehensive credit reporting regime.    "The key thing is that your monthly credit repayments will be stored by credit reporters.   "So, there will be a lot more information about each of us gradually building up over time."
Repayment histories for credit cards, phone and electricity bills or loans gave an insight into how well someone was able to manage their financial affairs, the commissioner said.   "This should help to give lenders a much better picture of how likely we are to be able to repay a loan."  

It was expected that the downside of giving up more personal financial information would be offset by encouraging more responsible and competitive lending, Shroff said.   Credit reporters could keep information on their databases for up to 24 months, after which it had to be removed.
Small repayment defaults worth less than $100 could not be listed and neither would payment histories dating before April.

Victims of identity theft would also be able to have their credit reports suppressed, or frozen, to make it harder for fraudsters to obtain credit in a stolen name.
Since the start of this month credit reporters have also been able to collect and use driver licence numbers to better match credit information to the right person.