In a recent review of the NZ Privacy Code 2004, there have been a number of amendments that will be coming into effect in October this year. The first, and potentially most disruptive from a system perspective, is the introduction of "Quote Credit Enquiries".
Quote Credit Enquiries are required because changes in the Code mean that Credit Bureaus must ensure that people shopping around for credit are not penalised for that in their Credit Score. This means Previous Enquiry Records cannot be used in the Score if they relate to a Quote Credit Enquiry. Once the Application has approved, i.e. the Loan opened, the Quotation Credit Enquiry needs to be updated to denote it is no longer a Quote.
However, this only applies where the Credit Provider (Finance Company) provides Risk Based credit products.
There are a number of implications to this, not least of which is being able to differentiate between a normal Credit Enquiry and a "Quote Enquiry" at the time of requesting a Credit Report. Secondly, being able to convert a Quote Enquiry into a Credit Enquiry once the loan is approved. We are working through the required functionality with both Centrix and Equifax and will keep you posted.
Currently, we are seeking to obtain a definition of Risk Based pricing of credit products, however it is understood that the net will be cast far and wide on this definition. The definition of Risk Based pricing is where tiered/variable pricing is offered that relies on using information held by a credit bureau to determine which rate applies. In other words, if an entity provides a different price (i.e. interest rate) to a customer which is based on their credit score/rating they are providing a 'Risk Based price'.
Other changes being introduced are an increase in the threshold for default reporting from $100 to $125 and a reduction in the maximum reporting period for previous credit enquiries from 5 years to 4 years.