Credit Reports form a record of your credit history and are used by Credit Providers (such as banks) in assessing whether or not to provide you with credit. Credit Reports help Credit Providers confirm your identity, verify your current and historical credit history and are used to calculate the likelihood of you being able to meet your credit repayments. Credit Reports are prepared by Credit Reporters of which there are several nationwide. They collect credit and personal information and sell that information to Credit Providers who are considering offering you credit.
Due to the large amount of personal information involved and the importance of Credit Reports to the credit industry, the Privacy Commissioner issued a Credit Reporting Privacy Code (the Code). The purpose of the Code is to ensure that there is a fair, transparent and accurate reporting system. The Code gives mandatory directives on how Credit Reporters are to collect and distribute information about your credit history.
Since first being issued in 2004, there have been a number of changes to the Code. Some of the key changes include:
- Credit Reports now contain positive information about your credit history rather than just negative information such as whether you have defaulted on your credit obligations. Positive information (for the purposes of the Code) is information like your track record in keeping up your repayments. Previously the Code generally prohibited positive information being included in a Credit Report. The purpose behind including positive information in Credit Reports is to give Credit Providers a more accurate and complete picture of your credit worthiness.
- You are now able to ‘freeze’ your Credit Report if you believe you are at risk of identity fraud. Freezing your account means that Credit Providers cannot access your Credit Report and so will not provide credit to anyone applying for credit under your name. The process for freezing involves an initial request which gives an automatic two week suppression. This can be followed by an extension request for a longer term suppression.
- The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT) has greatly increased the level of identity verification required by Credit Providers (as well as other entities). The Code has been amended to permit Credit Reporters to disclose credit information to Credit Providers, with the authorisation of the individuals concerned, for the purpose of identity verification under the AML/CFT. This should help to reduce some duplication when proving your identity to Credit Providers.
It is important that you ensure the information in Credit Reports is correct so that you have the best opportunity to obtain credit. The following are some of the steps you can take:
- Regularly check your Credit Report to ensure it is correct, especially before seeking credit. You should check with several Credit Reporters.
- If there is any information which is incorrect on your Credit Report, request the correction of that credit information from the Credit Reporter.
- If you believe you are at risk of identity fraud, ask all the Credit Reporters to freeze your account information until the risk has passed.