Credit record collection confuses
People are confused about what credit information companies can gather about them under new privacy rules, with some believing it includes crimes and religion and others not realising they have a credit history at all.
The findings come as companies begin collecting information about missed and late bill payments and total borrowing under looser privacy rules.
A survey of 915 people in June by TNS Global for Dun and Bradsteet, released today, found most respondents could name one or none of the credit factors that companies were allowed to collect about them.
More than 30 per cent thought a criminal record could be included and a few believed companies could keep medical or religious details on their credit file.
The lack of knowledge was alarming, said Dun and Bradstreet's John Scott, and could put people in a precarious position if it hurt their credit rating.
Dun and Bradstreet is one of the companies that will compile people's credit files under the new system and like other bureaus it has to provide people with a free copy of their file if requested.
"People who pay late will have this information recorded on their report, potentially damaging their creditworthiness and impacting their ability to obtain credit in the future," said Scott.
A loosening of privacy rules mean companies who offer consumer credit, such as banks, finance companies, telcos, electricity, gas and insurance companies can collect and swap information about borrowing and repayments, including people's total credit and any late payments and defaults.
Four in ten people surveyed did not know they had a credit record - although credit records were kept before the privacy rule change.
Criminal, medical and religious information is not included.
After a two-year review, Privacy Commissioner Marie Shroff announced a change to the Credit Reporting Privacy Code, which came in on April 1.
Credit agencies including Veda and Dun and Bradstreet will compile records using information from companies such as banks, who have been working out a deal to swap people's credit details with their competitors under umbrella group the Retail Credit Association.
Lenders have to notify customers before they start collecting the added information, which they can hold for up to two years.
Westpac, Kiwibank and finance company GE have done this, and are expected to be followed by other banks and lenders.
Telcos, power and insurance companies have the option to join in later.
Veda has said that a few hiccups should not hurt anyone's ability to borrow money for a house, car or holiday in the future.
But a pattern of skipping bills - even on small payments - could result in a negative score.
Companies stress that nothing will happen immediately because it takes months or years to build up a credit history.
A bad record could adversely affect the future ability to borrow, or even eventually obtain credit under mobile or utility contracts.
Payment data should start being shared late this year or in early 2013, but companies can gather histories before that as long as they have notified customers.
What's on record?
What goes on your credit file:
Existing credit report components
Personal identification details (e.g. full name, date of birth)
Record of defaults
Number of credit enquiries made, by whom and when
Newly-added credit report components
Date the account was opened and/or closed
Type of credit account
24-month history of repayments made on time and more than one day late
Details of the lender
Source: Dun and Bradstreet