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Credit reports

Who needs to check the accuracy of what gets put into their credit file? You do. It can affect your ability to get finance – or even employment and accommodation. You can get a copy of your credit report for free as long as you’re not in a hurry. But if you want an urgent copy, two out of the three credit-reporting companies will charge a fee – and one has been charging a higher fee than it should.

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In March 2014 the Privacy Commissioner, John Edwards, found that Veda Advantage’s fee of $51.95 was unreasonable. Legally, credit-reporting companies can only charge a reasonable fee for making the information available.

Veda has argued its fee is reasonable and is less than its actual costs.

But as a result of the investigation, the commissioner proposed an amendment to the Credit Reporting Privacy Code to set the maximum amount charged for an urgent request. The amendment would also require that credit-reporting agencies’ websites make this maximum amount clear.

After submissions and consultation, the final charge was set at $10 including GST. This comes into force in September. Before the announcement, Dun & Bradstreet dropped the cost of its “fast track” option from $30 to $10.

Out of the three credit-reporting companies only the newest company, Centrix Group, doesn’t charge and treats all requests as “urgent”. It also says all reports are usually available within 48 hours.

Dun & Bradstreet has a $10 “fast track” one-day option; its free service will take 10 business days. Veda’s “express” one-day option costs $51.95 until September 1 2014 and its free option can take up to 20 business days. Neither Dun & Bradstreet nor Veda make the free option as obvious on their websites as they do the paid options.

What’s on your file?

Checking your credit file has become more important because credit-reporting companies can now get much more information about you.

The companies focus on your credit history. They get information from credit providers (such as banks and finance companies), court records, and publicly accessible databases. Your credit file may include the records that show (among other things):

  • your name and any other names you use, date of birth, gender, present and past addresses, employer and occupation
  • who has made credit inquiries about you and when
  • applications you’ve made for credit cards, hire purchases and other loans
  • bills you've defaulted on, even if you eventually paid up after the default was listed with the credit-reporting company
  • records of any ID you’ve reported lost or stolen
  • insolvency information including proceedings relating to bankruptcy, “No Asset Procedures” and “Summary Instalment Orders”

Until recently, credit files were based on negative information rather than positive. So if you'd been regularly paying your bills on time and keeping your finances in order, it wouldn’t have been obvious from your file. At best there might have been a note saying "No adverse information could be found on the subject”.

Reporting the positive

The Credit Reporting Privacy Code was reviewed by the then Privacy Commissioner (Marie Shroff) between 2008 and 2009. As a result, positive credit reporting (also known as comprehensive credit reporting) was introduced in April 2012. This means positive events, such as paying bills or repaying debts on time, can be included on the credit file.

That includes information from non-financial credit providers such as electricity and phone companies.

Some of the information may include the amount of credit extended and the date the credit account was opened and whether it has been closed or is still going. Payments will be coded according to whether they are on time, or a certain number of days overdue (up to 180 plus days overdue). Your payment history for the last two years can be shown.

The amendments to the Credit Reporting Privacy Code also brought some other changes. Defaults under $100 won’t be listed on your credit file. And if you discover fraudulent credit accounts set up in your name you’ll be able to “freeze” your credit reports temporarily.

Bringing in comprehensive reporting may benefit consumers and the credit industry. Overseas research has shown it can reduce default rates (through earlier intervention), improve access to credit for people who might be using fringe lenders, support responsible lending practices, and improve competition in the credit market.

While it might appear intrusive to have your repayment history on your credit file, it may mean a lower interest rate or better terms and conditions on a loan for people who can show they’re good credit risks. And for consumers without a borrowing track record, evidence of regularly paying their bills could help them get finance in the future.

While comprehensive reporting has been allowed since April 2012, it’s taken a while to show up in credit reports (see “Who’s reporting”, below). Time was needed to develop a standard data format and for credit providers to rejig their systems to provide data in this format to credit-reporting companies.

Both Dun & Bradstreet and Veda are now providing comprehensive credit reports to credit providers and to individuals. Centrix told us it was receiving comprehensive data. Most participants were sending data to all three credit-reporting companies.

Checking your record

You're entitled to see what information credit-reporting companies hold on you – and to correct it.

One downside of positive reporting is that there’s more room for error because more companies are providing information. So it’s smart to check the accuracy of the information held in your credit file. And as the information is constantly changing you should do it every few years – or more often if you’re an active borrower. And get a copy of your report from all three credit providers as they may each have gathered different information.

To access your file you’ll need to send proof of your identity; a copy of your photo ID (for proof of your signature) or driver licence details; and evidence of your name and address (a bank statement or utility bill). If you're paying for the fast-track service you’ll also need to send your credit-card details (or you can pay through internet banking).

Centrix and Dun & Bradstreet let you do all of this online. But Veda requires you to send in physical copies if you’ve opted for the free version.

This is important info you should keep secure. So we recommend sending physical copies by courier – and to safeguard against it getting into the wrong hands, request the recipient’s signature. If you’re doing it online, don’t use a public computer or public WiFi.

When mistakes happen

If your credit file has an error, ask for a correction straight away and in writing. Set out your reasons clearly. Provide evidence where possible – otherwise your objections may be treated as delaying tactics.

If the debt collectors call, tell them the debt is in dispute. Most debt collectors keep records of their phone calls, so take careful note of the date and time of calls and to whom you have spoken. You'll need your own records if there is an argument later over who said what.

If you believe you’ve been a victim of identity theft or fraud, ask to freeze your credit report. The credit-reporting company can freeze your credit information for 10 working days. That means it can’t disclose your information as it would normally.

You can ask for the freeze to be extended but the credit-reporting company can refuse if it believes on reasonable grounds that there’s no risk of fraud.

You can't resolve matters? Complain to the Privacy Commissioner or you may be able to take your case to the Human Rights Review Tribunal.

Who else can look?

Your file isn't open to everyone. Companies need your permission to see it. But you've probably signed over that right countless times without realising it – the permission’s in the fine print of a surprisingly large number of application forms for finance, rental accommodation and other goods and services.

Some government agencies have the legal right to comb through your file without your permission. This is allowed under our privacy laws.

But don’t worry that a prospective employer or landlord might be able to see your phone bill or credit-card repayment history – they can’t. Positive information can only be shared with regulated credit providers. But they could see if you have any defaults or insolvencies listed against you.

Report by Kate Sluka.

Credit reports shopping around default

Shopping around for credit?

Be cautious how often you do this.

The Credit Reporting Privacy Code allows a credit provider to make a “quotation enquiry” for a potential customer and this enquiry can’t be used in creating a credit score. Quotation enquiries are used where interest rates are tailored based on a customer’s credit risk. It’s also known as “risk-based pricing”. You’d be able to find out the cost of borrowing from various lenders and then compare. And it wouldn’t affect your credit report.

But credit providers don’t offer quotation enquiries at present. The code has been amended so that they are possible in future.

At present all credit enquiries are going to show up on your credit report. These can be, and are, used in credit scoring by Veda. Dun & Bradstreet and Centrix, the other two credit reporters, don’t do personal credit scoring. But these enquiries can be seen by other credit providers – and it may make them wary.

A Dun & Bradstreet spokesperson told us that “consumers should avoid frequent and multiple applications for credit, especially with multiple lenders, as it might be seen as poor management of existing credit and debts”.

Credit providers must let you know if they’ll be running a credit check on you. If you’re simply shopping around, don’t consent to a credit check or submit an application until you’re ready to proceed.

Your credit score

Your paid Veda file will also include your “VedaScore”.

All of the information on your credit file is evaluated to produce a single score out of 1000.

The score is calculated using the information on your file and compared against patterns in past credit files of other borrowers. Your credit score will tell you how you measure up against other New Zealanders.

The credit score is designed for credit providers to see what type of risk you are. If you’re bankrupt you won’t get a score.

You won’t get this score sent to you if you ask for a free version of your credit report – it’s only available with the paid version.

Understanding the jargon

No Asset Procedure (NAP) is an alternative to bankruptcy for debtors with few or no realisable assets. The debtor is discharged after one year and can only have a maximum of $40,000 debt. The notice is removed from the credit file four years after the date of discharge.

Summary Instalment Order (SIO) is a formal arrangement between a debtor and a creditor that allows them to pay back all, or an agreed part, of a debt by instalments. SIOs are usually for three years, but can last for five years under special circumstances.

Defaults are when a credit account has been overdue for more than 30 days and where steps have been taken to recover the amount owing. These steps might include referring the debt to a solicitor, collection agency or repossession agency, or reminding the debtor about the amount and the consequences. Payment defaults remain on a credit file for five years but can be updated to show if the debt has been repaid.

Who's reporting?

Any credit provider sending positive information to a credit-reporting company has to let both its existing and new customers know it’s doing so. For new customers since April 2012, the terms and conditions they sign should contain this information.

These credit providers have either started positive reporting or indicated they intend to do so:

  • ANZ
  • ASB
  • BNZ
  • Kiwibank
  • Westpac
  • F&P Finance
  • Finance Now
  • GE Finance
  • QBE Lenders’ Mortgage Insurance
  • Toyota Finance NZ
  • 2degrees
  • Telecom
  • Genesis Energy
  • TrustPower

These prominent companies have told us they’re considering whether to provide positive information:

  • Vodafone
  • TSB
  • Meridian Energy
  • Mercury Energy.