Telecom To Share Data With Credit Agencies | Stuff.co.nz

Telecom is set to start sharing the payment histories of its customers with banks, finance companies and credit bureaus.

Information about whether people pay bills in full and on time - and, if not, how late they pay - will go on people's credit files and be used by banks and other lenders to help decide whether to extend credit.

The telco has notified customers that as of April 2 it may collect and share information measuring how timely people are at paying.

A spokeswoman said it had not yet started sharing data, nor worked out exactly how it might, but it would not be sharing the amount of people's bills.

Phone companies Vodafone and 2degrees said they were still deciding whether to take part in sharing payments histories.

Other companies who have signed up to the sharing deal with Telecom include big banks ASB, BNZ, Kiwibank and Westpac, and finance companies Fisher & Paykel Finance, Finance Now, GE Finance and Toyota Finance New Zealand.

They will supply information to three credit bureaus - Veda Advantage, Centrix and Dun & Bradstreet - for collating and sharing with the other signatories on a "who gives, gets" basis.

The bureaus can hold two years of people's repayment histories, including the timeliness of payments and the total amount of credit extended on credit cards, mortgages, overdrafts, car loans, hire purchases and phone contracts.

Payments will be coded according to whether they are on time, up to 29 days overdue, 30-59 days overdue and so on, up to 180 days-plus.

Under the agreement, individual companies can decide whether to give people a seven-day grace period before recording a payment as overdue.

Lenders have not disclosed how they will assess creditworthiness but Veda has said the pattern of payments and their timeliness is more important than the amount of any payments missed.

Last week, Veda managing director John Roberts said some major banks and finance companies were now loading payments data and the bureau should be able to start providing the information back to its customers around June.

So far, the main source of information being collected was unsecured lending, such as personal loans and credit cards, he said.

Privacy rules changed in April last year. Banks, finance companies, telcos, electricity, gas and insurance companies are allowed to collect and swap information showing how much credit someone has and how they are getting on with repayments, as long as they publish public notices first.

Telecom and other supporters of the change argue it will make the credit landscape fairer because lenders can see a fuller picture of people's payments - not only whether they have made a serious default on a loan, which is all they can see at the moment.

Critics argue it will send people who are struggling but not making serious defaults into the arms of loan sharks, because their credit scores will be damaged by a series of minor infractions.

An Australasian simulation exercise by United States-based researchers PERC for credit bureau Dun & Bradstreet found it was important for young people's credit scores for lenders to have access to telco data, because almost everyone has a phone.

A blank file is viewed less favourably under the new system than the old one, under which most people have blank files.

- ? Fairfax NZ News

Source: http://www.stuff.co.nz/business/industries/8663577/Telecom-to-share-data-with-credit-agencies

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