12 June 2008

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Consumers more diligent about checking their credit file

Media Release

The tightening credit market has spurred an increase in the number of consumers checking their credit file as financial institutions close their books on borrowers with a less than perfect credit record.

According to leading credit reporting and collections agency Dun & Bradstreet (D&B), the recent tightening of lending standards brought on by the liquidity crisis has caused a surge in the number of consumers checking their credit file, with figures more than doubling since December 2007. This trend indicates that more applications for credit are being denied or that consumers, aware that easy credit is a thing of the past, are checking their file is in good health before they apply for credit.

The number of consumers checking their credit report has increased by 118 per cent since December 2007, with the most significant monthly increase (45 per cent) coming between March and April.

Comparing the April figures to the same period in 2007 also reveals a significant jump, with consumer checks up 57 per cent.

According to Christine Christian, Dun & Bradstreet's CEO, the days of cheap and easily available credit are over.

"The credit crunch has forced lending institutions to rein in their books and as a result consumers are being forced to consider whether they'd be able to borrow should the need arise," said Ms Christian.

"In the current environment banks are only willing to lend to those that don't have adverse information on their record - they won't take the risk on anyone with outstanding debts, missed payments or court actions against their name."

According to D&B, despite the credit crisis and the rapid increase in the number of individuals checking their credit file, many consumers remain unaware of the importance of a good credit record.

A large number of Australians use multiple sources of credit, including credit cards, debit cards, home loans and personal loans. In addition, consumers maintain credit agreements for items such as their phone, utilities account and council rates bill. If consumers fail to effectively manage their credit facilities they can end up in a debt spiral which will detrimentally impact their credit file.

Individuals with a poor credit history will have difficulty obtaining affordable, mainstream credit for all purposes and those who have fallen behind with repayments may also find it hard to consolidate loans and reduce their monthly outgoings. Anyone who is juggling a range of debts with money owed on credit cards, store cards and loans should be trying to get their finances under control. This begins with always paying your bills on time, no matter who the provider or what the amount. "Many Australians don't understand how their credit report is compiled and many are unaware of the information credit providers use to make their lending decisions," said Ms Christian. "Understanding the system is the critical first step in ensuring that consumers effectively manage their financial health." Anyone who believes they may need to borrow should check their credit rating. If there is any incorrect information on the file contact the credit reporting agency and have the information corrected immediately.

Danielle Woods
D&B PR Manager Australia & New Zealand
(02) 8270 2926

About D&B

D&B is the world's leading provider of business-to-business credit, marketing and purchasing information and receivables management services. D&B manages the world's most valuable commercial database with information on more than 130 million companies.

Information is gathered in 193 countries, in 95 languages or dialects, covering 186 monetary currencies. The database is refreshed more than one million times daily as part of D&B's commitment to provide accurate, comprehensive information for its more than 150,000 customers.

The Australasian operations were bought out by the senior management group in August 2001. It was the first MBO of a wholly owned subsidiary in D&B's history worldwide.

Today Lazard Carnegie Wylie owns an approximate 90% stake in DBA and the local management team a 10% stake.

Strategies for future growth include developing DBA's commercial and consumer credit referencing business; expanding its receivables management outsourcing business; maintaining its lead in the development of unique credit and risk scoring products; and developing new products specifically tailored to the Australasian market. DBA currently employs over 500 people in Australia and New Zealand.