Kaimai_Law_Bethlehem_-_Winter_2012_-_Commercial_eSpeaking.pdf
The most significant change is that since 1 April 2012 credit reporters, such as Veda Advantage, can collect and share ‘repayment history information’ about you and your business with finance companies, phone or power companies, and other credit providers. The collected information will be recorded in credit reports that detail how you have performed in respect to paying your accounts. Monthly payments on credit cards or utility accounts, and your mortgage payments can also be collected and shared.
Implications for you
The sharing of this type of information may be an issue for you if you have a poor history with repayments. Credit providers, such as banks or trade suppliers, are likely to use this information to decide whether to lend money to you, or to grant you a trade account. For example, a car financier can request a credit report about your repayment history when deciding whether to give you a loan to buy a car. If your credit report is poor and shows a history of, say, frequent late payments and careless account management, the car financier is less likely to give you that loan.
What are your rights?
Credit providers must make you aware of the changes to any of their credit reporting practices before they start sharing information about your credit accounts and repayment history with credit reporters. To do this, credit providers must obtain your consent to permit disclosure of your information.
Further, the government has also imposed controls and accountabilities to protect you as a consumer. Only credit providers can share information. This excludes prospective employers and landlords. Credit reporters are prohibited from listing small defaults of less than $100, and are required to send annual compliance reviews to the Privacy Commissioner.
Why give consent?
You may be asking yourself why you would give consent to the collection and disclosure of your repayment history information. There are some advantages in allowing this sharing of information. Up until now, New Zealand has had what is termed a ‘negative credit reporting system’ that only recorded defaults, bankruptcies and court judgments. As a result of the amendments, New Zealand now has a ’positive reporting regime’, enabling credit providers and credit reporters to also share positive information about you, including records showing that you or your business have a good payment history. Most significantly, this positive reporting regime may open up new opportunities to obtain credit to those who may have otherwise been excluded due to a lack of information about them. This could be an extremely important benefit for small businesses that were previously ineligible for credit.
Also, it’s likely you will have to consent to the disclosure of your information by your bank or credit provider in order to obtain a loan or a trade account.
What should you do?
All credit providers in New Zealand can now access your repayment information. As such you should check the content of your personal credit report, amend any errors and take steps to improve any bad repayment history. To request your free personal credit report contact Dun & Bradstreet at www.dnbcreditreport.co.nz.
Most importantly, pay your bills on time and manage your debt. For businesses, do your housekeeping and make sure you have a robust accounting system.
