Proposed changes to credit reporting rules would allow ongoing reporting of a person's repayment history, such as whether monthly credit card, mortgage or utility payments were made on time.
Access to the information would largely be limited to credit providers subject to an independent dispute resolution scheme that could act on complaints about credit practices.
Notifying the proposed changes to the Credit Reporting Privacy Code today, Privacy Commissioner Marie Shroff said amendments would introduce a more comprehensive style of credit reporting, closer to the practice in the United States.
The changes would also enable victims of identity fraud to "freeze" their credit records.
"Identity fraud is a serious issue and this is a practical response for individuals. I have proposed a way of limiting the risk of someone taking out credit in another person's name," Ms Shroff said.
The change would enable consumers to have their credit report suppressed if they were a victim of fraud. The listing of defaults under $100 would also be prohibited.
Overall, the amendment marked the establishment of a more comprehensive credit reporting system.
Now, information was added to credit reports at the time people sought credit and when they defaulted on obligations. The amendment would mean there would be continual reporting on a person's repayments whenever they held credit.
"There is no doubt that this would be a more intrusive regime, but I have tried to ensure that there will be benefits to individuals and the community, as well as to business interests," Ms Shroff said.
The package of changes would help banks and finance companies make robust credit decisions in an environment that demanded quick decisions on credit applications.
"Credit reporters have argued that these changes will assist lenders to behave responsibly and allow them to offer competitive and accessible credit to consumers."
The changes were no yet fixed, and Ms Shroff said she would like to hear views on whether they were worthwhile, whether the balance struck was the right one and if protections and safeguards would be sufficient.
John Roberts, managing director of credit checking agency Veda Advantage said his company supported all the directions taken in the amendment, including consumer safeguards and the limitation on listing defaults under $100.
The reform would "quietly underpin the economy as it climbs out of recession", Mr Roberts said.
"Lenders will be more confident in lending money when they have been able to make more thorough assessments of a borrowers' ability to pay."
NZPA