Retail groups see danger in proposed changes to credit lending

The warnings come ahead of a law reform discussion paper on credit reporting, to be released this month.

The retail groups say people will be sold more high interest rate products if credit check agencies are allowed to give lenders extra information about borrowers.

The Australian reports that Australia's two major credit check agencies are lobbying for law changes so they can provide banks and other lenders with more information on consumers' credit histories.

Existing laws allow credit check firms, like Dun & Bradstreet, to give lenders information about past customer applications for credit and whether a consumer has defaulted on a bill in the past five years.

D&B CEO, Christine Christian said banks and lenders could not lend responsibly unless they had access to more credit information.

"It's very difficult to hold banks and other lenders to account if they can't have a full picture," she said.

D&B is proposing the lenders be given information about a customer's approved credit accounts, the date when a credit account was opened, a consumer's credit limit but not current payment history or who they borrowed from.

Christian said existing laws punished consumers who shopped around for credit, while a move to positive credit reporting would reduce the default rate.

The Australian Law Reform Commission is due to release a discussion paper on possible changes to the Privacy Act 1988 this month with a final report to be presented by March 2008.