In the Press

Scoop (New Zealand)

Credit reporting system denies NZers wealth

October 14, 2005

Thousands of people are potentially denied access to the New Zealand dream of home ownership, while many others are provided access to credit they can't afford because of the country's restricted consumer credit reporting system.

These are the findings of international research presented today by Dr Michael Turner (PhD) from the Information Policy Institute in the United States, at an American Chamber of Commerce business lunch at the Stamford Hotel, Auckland.

International data shows that New Zealand would see a decrease in default rates and an increase in participation rates for demographics currently under-served, if legislators allowed even a small amount of additional information to be placed on a consumer's credit report. New Zealand is currently one of only three countries in the developed world that continues to operate on a negative reporting system.

This reporting system means that when assessing a credit application, a potential lender can only determine whether the applicant has lodged any other credit requests and whether the applicant has been delinquent on any payments in the last five to seven years. New Zealand legislation prohibits positive data on credit reports, such as account balances and timely payment history.

Dun & Bradstreet, a leading Australasian credit reporting agency, believes that some additional positive information, such as whether credit applications have been approved, should be allowed on credit reports and is seeking a Parliamentary Inquiry into the matter.

Dr Turner says that while arguments opposing reform are generally unproven, the data supporting the case for reform is substantial. That data includes: