Previously, New Zealand has operated with a “negative” credit reporting system which records defaults, adverse judgments and bankruptcies on individual credit reports.  Under the new positive reporting system, credit reports will also information in relation to:

• The type of accounts held by individuals;

• The credit limits of those accounts;

• Whether monthly payments are being made on time; and

• Whether each account is open or closed.

The Code also permits the use of driver licence numbers, allowing for more accurate identity verification and lessening the chance of individuals using different names or spellings to obtain more credit.
 
The new positive credit reporting system will not be backdated.  Therefore, while amendments to the Code came into effect on 1 April 2012, it will likely take some time for positive credit information to make its way to individual credit profiles.  

What you can do now

With the new changes to the Credit Reporting Privacy Code, now is a good time to check your credit assessment procedures. 
 
This includes not just ensuring that prospective customers are assessed for credit risk by searching the customer’s credit history, but also ensuring that your Terms and Conditions of Trade and Credit Applications collect useful credit information from the outset.  We would recommend that new customers are asked to provide their driver licence details and that the necessary authority is obtained from customers to carry out credit checks on them.  The customer’s authority should be included in the Credit Application form.
 
If you are in the business of providing credit to customers, it is important to conduct regular “health checks” on your credit contract documentation to ensure that it stays current with developments in the law. There are legal protections for suppliers that we can incorporate into your customer contract documentation to lessen the risk and protect your business for when things go wrong.  For further information please contact your usual Jackson Russell advisor.