D&B Welcomes New Credit Reporting Reforms
D&B Welcomes New Credit Reporting Reforms
New Zealand to commence transition to
comprehensive credit reporting
Today (Sunday, 1
April 2012) marks the commencement of new laws in New
Zealand affecting what can be reported about an
individual’s credit history and
repayments.
According to credit reporting agency
Dun & Bradstreet, banks, telecommunications companies,
utilities and other credit providers will now be able to
record whether people are paying their bills and other
financial commitments on time.
General Manager of
Dun & Bradstreet in New Zealand, John Scott, said that it
was now broadly recognised that ‘comprehensive’ credit
reporting has the potential to reduce credit costs, improve
lending and lower rates of default.
“Prior to
today, New Zealand was one of the few remaining countries in
the world to conduct lending in a ‘negative’ data
environment where credit providers only had access to
adverse payment information on a consumer like defaults or
bankruptcies,” Mr Scott said.
“The new
‘comprehensive’ credit reporting environment now means
that information on the timeliness of payments, including
whether payments were on time or late, will now be
available.”
A recent quantitative study – the
first of its kind for New Zealand – conducted by Dun &
Bradstreet with the Policy & Economic Research Council
(PERC), one of the world’s foremost experts on credit
information and economic development, looked at the impact
of ‘comprehensive’ credit reforms in New
Zealand.
“The report found that the reforms have
the potential to significantly improve credit distribution
and access in New Zealand.”
“The use of
‘comprehensive’, rather than just ‘negative’, credit
information provides greater visibility of under-served
consumers and small businesses who would otherwise find it
difficult to access credit.”
In particular, the
study highlights a number of specific benefits associated
with the changes, including:
• the ability to
correctly assess low risk individuals is more than doubled
in a ‘comprehensive’ credit reporting environment;
• under a ‘comprehensive’ credit reporting
environment there is a 32 per cent improvement in the
ability to identify an individual that is most likely to pay
late or default;
• the use of non-bank
information, like payments on telecommunication and utility
bills, provides significant improvement in access to credit
for previously under-served sectors of the community;
•
young people are the primary beneficiaries because of their
limited banking history and the fact that non-bank credit,
such as mobile phone accounts, are the first credit
experience of most young people.
“By documenting
good credit performance, the introduction of
‘comprehensive’ reporting removes the barriers to
mainstream credit for those individuals who may have
previously had an adverse credit event. This is because
the existing New Zealand system documents only bad, or
negative, credit performance,” Mr Scott
said.
“In particular, small business is a big
winner from the new reforms because of the additional
information that becomes available on business owners –
this tends to turn small business owners from credit
‘invisible’ to credit worthy.”
These
significant reforms mean that it is now increasingly
important for individuals to monitor and track their
repayment patterns and credit history. Despite this, a
recent Dun & Bradstreet survey found that only one-in-ten
people have ever attempted to access their personal credit
report.
Consumers can obtain a copy of their
personal credit report at www.dnbcreditreport.co.nz
ENDS