Privacy and Credit Reporting
Credit may be refused to a consumer on the basis of an unfavourable credit rating report supplied to a credit provider by a credit reporting agency (CRA). CRAs are private companies that compile information about consumers for the benefit of their members.
Part IIIA of the Privacy Act 1988 (Cth) and the Credit Reporting Code of Conduct regulate the conduct of credit providers and credit reporting agencies and how information about a consumer’s credit history is recorded and accessed. Protection may also be found in Part 4 of the Fair Trading Act 1987 (SA).
A credit provider includes banks and credit unions, as well as organisations that provide credit as a part of their normal course of business. In addition, for the purposes of the Privacy Act, a credit provider also can include a business that agrees to defer payment for goods or services for a period of 7 days or more..
Recording a payment default is only permitted if:
- the debt is at least 60 days overdue [s 18E(1)(b)(vi)];
- the credit provider has taken steps to recover part or all of the amount outstanding [s 18E(1)(b)(vi)];
- in particular, the credit provider must have sent a written notice to the last known address of the individual advising them of the overdue payment and requesting payment of the amount outstanding (paragraph 2.7 Credit Reporting Code of Conduct); and
- the credit provider has notified the individual that it may provide information to a credit reporting agency [s 18E(8)(c)].
Section 18G(a) of the Privacy Act 1988 (Cth) states that a credit provider or a CRA in possession or control of a credit file must take reasonable steps to ensure that the personal information contained in the credit file is accurate, up-to-date, complete and not misleading.
The Code of Conduct also limits the type of information a CRA can list on a person’s credit information file and the length of time the information is kept. There are also limits on who can access a consumer credit file and the purpose for which they can use a credit report.
The type of information that can be listed on a credit report is limited to:
- Personal details including a persons full name, date of birth, drivers licence number and employment information;
- Listing of any loan applications and enquiries by credit providers regarding the provision of credit
- Directorships and proprietorships
- Judgments, writs and summonses
- Bankruptcy information
- Loan defaults including payments that are overdue, loans finalised and arrears brought up to date
- Serious credit infringements.
Information regarding overdue payments (loan defaults), court judgments and loan applications and enquiries remain on a credit file for 5 years. Information about serious credit infringements remains for 7 years. Bankruptcy information remains for 5 years from the date a person is made bankrupt, or if the person's bankruptcy discharge is delayed, 2 years from the date of discharge whichever is the later date.
From December 2012, lenders (such as Banks or Credit Unions) have been collecting information about the repayment history for each customer's loan. This will be included on a person's credit report from 12 March 2014, as part of extensive changes to Part IIIA of the Privacy Act 1988 (Cth) and the Credit Reporting Code of Conduct . The information recorded includes the due date for payments, whether or not the payments were made on that date, and the date of any missed payments. The aim of this is to allow a person to build up a positive report of their repayment history where payments are being made on time.
Checking Credit History
Consumers are entitled to a free copy of their credit report to check their credit history and the accuracy of the information contained on the report. The CRA must provide the report to the consumer within 10 days of the request without charge unless the consumer requires the report urgently, in which case a charge may be made for the information. Beware of third party brokers who charge for the information – consumers are legally entitled to information about their credit report for free as long as it is not required urgently.
Credit reports should be carefully checked for accuracy. A consumer is also entitled to have entries on a credit report amended where incorrect information is recorded.
Amending a Credit Report
Section 18J of the Privacy Act1988 (Cth) requires both CRAs and credit providers to ensure that information contained within a consumer’s credit report is accurate, up-to-date and not misleading, by either adding to, correcting or deleting information.
Where there is a report made by a credit provider to a CRA about an overdue payment and the consumer subsequently makes the payment, the payment is recorded but the default remains on the consumer’s file for a period of 5 years.
When a consumer asks for an amendment to be made to a credit report, the CRA is required to address the request “promptly” and if possible make the amendment sought. If the change cannot be made, the CRA is required to advise the consumer of the right to have a statement regarding the request to amend the report included in the report (as long as the statement is not too long). The CRA is then required to include the statement on the file within 30 days of the request by the consumer.
A consumer also has the option of approaching the credit provider to ask for an amendment to be made. If a dispute arises regarding the amendment sought by the consumer, the consumer can raise the dispute with the credit provider’s internal dispute resolution service, and then if not satisfactorily resolved, the credit provider’s external dispute resolution service. However, currently not all credit providers who are eligible to report overdue payments are required to be members of dispute resolution services and it is best to check with the organisation.
If a consumer cannot resolve a problem with the conduct of the CRA relating to a credit file, a dispute can be raised in a similar manner, and CRAs are also members of external dispute resolution services. Further assistance may also be obtained from the Office of the Information Commissioner.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.