Credit history a mystery

13 July 2011

Credit history a mystery

Only one in ten Kiwis have tried to obtain their credit report

Only one in ten Kiwis have ever attempted to obtain a copy of their personal credit report and nearly half of all people have no interest in doing so, according to new research by credit reporting agency Dun & Bradstreet. The findings come as the Privacy Commissioner prepares to reform New Zealand’s credit reporting laws to allow credit reporting agencies, such as Dun & Bradstreet, to collect additional pieces of credit information that would provide lenders with a more comprehensive overview of a consumer’s risk profile.

The Dun & Bradstreet survey, conducted by TNS Global, also reveals that:

• Thirty-nine percent of Kiwis have no idea they have a personal credit report.
• Forty-eight percent of people do not know they are entitled to a copy of their personal credit report.
• Eight percent of Kiwis have not obtained a copy because they are worried about the outcome.
• Fifty-eight percent of Kiwis do not know how to obtain a copy of their personal credit report.

The findings are particularly concerning given the central role personal credit reports play in the credit assessment process, and the fact that all Kiwis are legally entitled to a copy of their report.

To make the process easier for individuals to obtain a copy of their credit report, Dun & Bradstreet has launched a new website, www.dnbcreditreport.co.nz, that provides consumers with online access to their report for free. This is the first time Kiwis have had this ease of access to their credit information and reflects Dun & Bradstreet’s intent as a relatively new credit reporting agency to provide consumers with better access to their personal data. Historically, this information has been difficult and time consuming to access.

Dun & Bradstreet General Manager John Scott says the new service reflects the company’s goal to provide consumers with straightforward access to their personal information.

“The launch of the website could not have come at a more critical time in light of the proposed changes to privacy legislation. Now, more than ever, consumers need to be able to see for themselves what those changes will mean.”

“This comes at a time when credit access has become crucial to New Zealand’s economic recovery, particularly in earthquake-affected areas,” said Mr Scott.

Overall, statistics reveal that the groups displaying the least knowledge of their personal credit status are those aged 25 to 30 years and mid-income earners. Only 36 percent of those aged 25 to 30 years are aware it is possible to obtain a personal credit report, as compared to the national average of 52 percent.

Out of the 13 percent of people who have tried to procure a copy of their personal credit report, most of them are aged 30 to 44 years, which make up a significant portion of the able workforce. These individuals are also more likely to be low-income earners and have families with four household members under 18.

In addition, 22 percent of people do not believe they have a credit history, despite a strong reliance on credit to make major purchases such as homes, cars and other assets. Surprisingly, 36 percent of those earning above $200,000 per annum- the most likely to spend on big-ticket items- do not believe they possess a credit history.

Only eight percent of people who have never tried to obtain a credit report are worried about the outcome. This is the most accurate for unemployed individuals, families with five or more household members under 18 and those living in the Napier-Hastings area.

“Using credit is part of our everyday life, but many consumers are still unaware of the important role today’s payment behavior can have on tomorrow’s credit access,” Mr. Scott said. “Consumers need to be far more proactive about their credit histories.”
“New credit reporting systems will mean consumer credit activity will be recorded in far more depth than it has in the past. While this is good news for consumers and lenders, it is vital that we all understand the changes.”

The credit reporting system reform, proposed by the Privacy Commissioner Marie Shroff, will allow credit reporting agencies to collect and report information on the type of credit commitments consumers have and whether they are making their payments in a timely manner. This is in addition to currently permissible data such as defaults and public record data. The changes will allow credit providers to make a more informed decision, and around the world, the benefits have included reduced default rates and increased access for financially excluded demographics.

ENDS

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