New pilot study analyses Privacy Act effects

by Mackenzie McCarty03 Dec 2012

Credit reference agency Veda has released the results of a pilot study on the impact of comprehensive credit reporting, following last week’s passage of the Privacy Amendment Bill, 2012.

The report combined de-identified account records across ten lenders, mapping real data from credit cards, mortgages, personal loans and auto loans to create a cross-industry view.

According to Veda’s findings, the riskiest combination of account holders are those with personal loans and credit cards (6.4% of the sample).

However, Veda says it’s not the range of credit that necessarily makes a difference to an individual’s risk – it’s the range of lenders. Only 10% of the sample had four accounts but, of these, one third spread their credit over three or four lenders.

The most pronounced end of the spectrum, those with four accounts across four lenders, had a delinquency rate six times higher than those with four accounts with just one lender.

Veda CEO, Nerida Caesar, says the changes seen as a result of the new legislation will be significant.

“Based on experience overseas, we can expect to see consumer credit consciousness increase quickly as the industry uses the coming months to start rolling out new CR policies and products. Consumers now need to be more aware and understand that how they manage all their credit lines…will now be visible on a credit file used by lenders to help make credit risk decisions.”