ACA vetoes deeper credit checks

The push by banks and other lending institutions to gain full access to consumers' credit histories will be strongly opposed by the Australian Consumers' Association. Currently financial institutions only have access to negative reports such as payment defaults. The ACA says this should be sufficient – although these data contain inaccuracies that consumers find hard to correct and the association is currently involved in trying to quantify the extent of the inaccuracies.

The ACA said access to fuller credit histories would not stem bad debts or prevent loans to consumers already carrying excessive debt, contrary to claims by the lending institutions. There is, however, some support for the banks' stance in a US study undertaken by Georgetown University's Credit Research Centre. The study compared the US and Australian models of access to credit histories and concluded that Australia's restrictive system actually denies loans to “deserving” borrowers while resulting in 78 per cent more delinquencies than in the US. There's a payoff between more disclosure and increased credit, the centre concluded.

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