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Credit Reports Explained

using credit bureau information in a risk assessment

It is a good idea, as part of any credit assessment, to have some credit bureau input. Traditionally trade references have been requested from credit applicants, but this is really of limited use – no-one in their right mind is going to give a referee that will give a bad reference!

Enter credit bureaus. These provide independent credit reports for consumers and commercial entities that contain usually fairly comprehensive credit data that can be used in a credit assessment. Of course this does come at a cost, but in most commercial situations this cost is very reasonable.

The specific content of the reports differs from provider to provider but there are also some common elements. All have negative data, public information and, for company reports, a risk indicator and companies office information. See table below for the types of information these reports contain.

There are 3 main credit bureaus in New Zealand, and these are, in alphabetical order and with links to their respective homepages (will open in a new tab):

1. Centrix – founded in 2009, so it is the newest bureau of the three, but does have significant industry experience backing as founded by former executives of BayCorp.

2. Equifax – formerly Veda Advantage, headquartered in the US.

3. illion – formerly Dun & Bradstreet, illion still retains commercial links to the global Dun & Bradstreet entity, established in 1841.

Each have their own pricing structures, bureau data and report formats.

Report Data

The following is a description of the types of data elements that you can expect to see in a bureau credit report

Adverse Data

Whether the report is for a Consumer or a Commercial entity any existing negative data will be shown. This will include court judgments, collection records and bankruptcies. Be aware that the information is likely to be different from bureau to bureau as they get their information from different sources.

Risk Score

Most reports will also contain a Risk Score. This will be calculated from the data points in the report and will differ from bureau to bureau as not only will their data be different but each has their own proprietary score calculation method.

Notwithstanding this, it is a good tool to use as does give you a method of comparing risk levels between customers.

Companies Office Information

Only available for entities that are registered at Companies Office this section will give you a listing of the documents that have been filed as well as summary director and shareholder information.

PPSR Information

Security interest registrations held on the Personal Property Securities Register against the company. This comes in very useful as part of your credit assessment.

Payment History

For companies only, reports will usually contain some information regarding how the entity has been paying its suppliers. This will not be done by identifying specifics but by presenting data in a statistical way, perhaps giving an indication of current DSO.

Key Points:

  • Regular credit assessments should be conducted on existing customers on a regular basis and for new customers on application for credit. It is a very useful component of any credit assessment to have a third party data assessment
  • Although all 3 credit bureaus have their own distinct databases, there will be considerable overlap so no matter which one you choose to work with you should receive some valuable information.
  • When ordering Individual (or Consumer) credit reports remember to comply with the requirements of the Privacy Act before ordering.

Your Own Credit Report

Each of the bureaus allow you to have access to your own credit report free of charge. The links below will take you to their respective report pages for you to order should you wish:

Risk Assessments

Still not sure how to conduct a risk assessment on your customers? Contact BizEnhanz now for expert, professional help

Expert Opinion

Still have questions? BizEnhanz can help you determine which report is right for your business circumstances and how to maximise usefulness whilst minimising cost

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