Look how well this worked in the US. Really sorted out the wheat from the chaff!!

What a joke.

Good point, Garry.

There's no point in having a credit scoring system if financial institutions are going to lend to you even if said score is terrible.

Although this was prevalent in the US, our banks in particular pay far greater attention to the ability of a borrower to repay a debt. Knowing what sort of score you need to improve your chances of credit would be a good tool for most people in NZ.

Bernard/Alex: So let's say I'm looking for a $100K loan to start my uh, solar powered hydroponics operation......would I give Veda a call to receive my current credit score?

Or would it only be released to me when I apply for the loan?

Interesting stuff, but the last para is the most interesting,

"This was in contrast to a "massive" 64 per cent jump in defaults by businesses, compared to the first six months of last year, and a decline in commercial credit demand."

Garry: the problem in the US was ppl didnt do the credit/risk assessment just in case the prospective client didnt pass it and they didnt get the commission...The entire retail lending system was corrupt...everyone from the advisor who sold individual policies to the banks who sliced and diced them. The banks wanted fodder to slice and dice so it all became AAA rating and could be sold to the pension funds etc etc...this meant the pressure was on to keep the system running and running faster and faster, greed took over...

regards

sharonv,

why not add another relic, such as "cash is king", or in other words, save in order to afford the extra luxuries in life without credit? That would address the cause of the apparent "need" for a credit rating system in the first place! Such newly found habits may also deal with many other economic and social side effects of the debt binge we have just gone through in the last 30 years...

For many people, being refused credit could be the best thing that ever happened.

The problem with this system, is when mistakes occur (and they will) and your credit rating is compromised because someone entered data incorrectly. Then you have to "prove" it is not you.

Agree with sharonv: any system is better than no system, which is what we have at present. Yes, these things can be gamed, or used to be able to be ignored by those who thought they had escaped financial gravity via exotic mortgage instruments. But even a broken shaft of dim sunlight is better than total darkness, no?

And in any case, no banksters are gonna be able to sell those sorts of products for a generation or so. Debt revulsion is building up, and will lead to some measure of self-regulation, just as it was from the 30's until the late 70's.

I thought all this data was available already. I got a top up on a loan to help my son buy a car last week. It took all of 30 seconds for my bank manager to check my credit history and make a call accordingly.
Which comes to the next issue, accuracy and integrity of the database. I had one hiccup on record, one that I knew nothing about, because the people who had put it on had not notified me that any monies were owed.
Out of interest it was LTNZ, for an old car of mine that had finished it's life and had sat in my driveway for about 2 years. Apparently if you don't de-register a vehicle, they do it for you after 12 months, charge you $200 for the favour, and the first time you find out about it, is when they have sent the account to Veda Advantage.
I'm sure there would hardly be a person in NZ, that does not have a similar story. The problem is, it is on you to prove something is incorrect, once it is on the debt collectors database.
These people really need to tidy up their act, in terms of their processes of how they allow an addition to their database, otherwise they lose all credibility

It is a very good system (having worked in the finance industry) as you gain points for paying your bills on time, keeping up with your mortgage etc so hence you should pay less in interest charges based on your profile rather than getting welded as you cover other peoples risk.
Our system at the moment only tells you if someone hasnt paid (if the creditor bothers reporting it as it costs to load a debt), it dosent tell you if someone has incurred a liability and performed well in meeting their obligations.
Gives you a fuller picture and works well for responsible people and for people who have got into trouble and reformed themselves. I got turned down for a share trading facility a few years back as I had a lack of credit applications, I have no loans, no HP, a freehold house and dont move around so no one credit checked me for years which got them nervous. NZ is about the only country that dosent credit report using positive as well as negative data. About time we changed I feel.

Ric it works well in the UK - our ability to get a mortgage at a good rate was determined by our credit score. It is easy to register with these agencies so that you have access to your score and can check for data entry errors. I have also registered for ID protection as I had my bag snatched containing drivers licence, national insurance card, credit and debit card - in short everything someone needed to take out a loan in my name. ID theft is big here. Under the current scheme no-one can assume my identity to arrange credit without my being notified. It works well and a good credit score is gold worth keeping and polishing IMO. I see it as a form of insurance - peace of mind and all that. I don't know why it goes so horribly wrong in the US - but then there is much in the US that cannot be explained.