What is credit reporting?

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Why credit reporting exists and who’s involved

When you apply for consumer credit your credit provider needs to have enough information to help them decide whether to give you credit (such as a bank loan) or manage credit already given to you. However, information about your finances and creditworthiness is personal information and the Privacy Act 1988 has strict rules about the handling of your personal information.

Credit reporting is a way to balance protecting your personal information and your credit provider’s need to access your credit information. It involves credit providers, credit reporting bodies and other third parties (for example, a mortgage insurer). The credit reporting laws regulate how these organisations may collect, use and disclose your consumer credit-related personal information. (Other rules apply to commercial credit information.)

How credit reporting works

In the course of their work, a credit provider discloses your credit related personal information to credit reporting bodies. Each credit reporting body then compiles this credit information into a credit report and uses it to derive a credit score to show your creditworthiness.

A credit provider may get a copy of your credit report (including a credit score) from a credit reporting body to help decide whether to give you credit or manage the credit already given to you. In certain situations, they may also disclose this information to other credit providers or third parties.

A credit reporting body may also disclose regulated information to other third parties in certain situations. For example, for the work of a recognised external dispute resolution scheme of which it is a member or an enforcement body.

Your part in the credit reporting system

You give personal information to a credit provider who gives your credit information to credit reporting bodies to produce your credit report and your credit score. This is called your credit reporting information.

 

Other parties involved in the credit reporting system

Credit reporting bodies may give your credit reporting information to a specific third party or a credit provider. The credit provider may also give your credit eligibility information to a specific third party and another credit provider.

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