KEY POINTS:
Ever wondered why you're no longer receiving enticing offers of cheap loans and expensive credit cards in the post? It could be that your suburb is in the red.
Marketing departments of banks and other lenders are using colour-coded "geo-risk" maps, to avoid areas of cities which have high rates of credit defaulting. The maps, produced by credit reporting bureau Veda Advantage, clearly demarcate the areas of highest risk, which are then unlikely to receive mailouts with special offers of credit from lenders.
That means people may find themselves in an area identified as high-risk without them knowing it - and missing out on loan offers.
"Possibly people might be surprised," said Veda's New Zealand director John Roberts. "People are surprised we have credit files on them at all. Most people don't know until they get turned down for credit."
He said South Auckland and Canterbury currently stood out as high-risk areas.
Roberts said the company held details of more than 97 per cent of "credit active" New Zealanders (about 2.8 million people) and 400,000 companies.
Latest figures released by Veda show overall defaulter numbers have almost doubled since 2004 - signalling growing stress among New Zealand consumers.
Roberts believes lenders do take into account where people live in deciding whether to offer credit, although there are many other criteria.
"Your address does count but it is just one factor. They wouldn't just rely on that. They have their own policy rules - names, driver's licence, address, length of time at that address, employment, income, information on their credit file, bankruptcies, court judgments and so on."
He said the geo-risk information also encouraged "responsible lending" because extra credit was not being offered to people already up to their eyeballs and defaulting on loans.
"It's not sensible to put those offers into an area where there isn't a high tolerance for credit."
Roberts said the information was "very solid and specific" and there was a strong link between credit default and socio-economic factors.
On the Auckland geo-risk map, areas such as South Auckland, Glen Innes and Tamaki appear heavily "in the red", while central areas such as Remuera and Parnell are predominantly coloured in the low-risk blue and green.
A significant blob of red in upmarket Kohimarama represents an area of state housing.
Lending banks told the Herald on Sunday they did not discriminate against people applying for credit on the basis of where they lived.
Westpac spokesman Craig Dowling said the bank used geo-risk information "to ensure marketing money is targeted wisely... However, in terms of selling products such as credit cards, debit cards, personal loans or term deposits, we don't make any assumptions in any particular area.
"It's not appropriate to use general assumptions and apply them to individuals."
Kiwibank spokesman Bruce Thompson said his bank's key criterion was whether an applicant could service a loan or not.
"Supposing somebody in fulltime paid employment in a low income area is less able to service a loan isn't credible."
Blair Vernon, the BNZ's general manager of strategy and marketing said: "We don't use generic broad sweep data to make credit decisions - rather we use specific applicant data, since every applicant is unique and the credit behaviour of a neighbour is simply not relevant to another person."'
An ANZ spokeswoman said the bank's lending criteria was based on "serviceability". She added that geographical locations were "basically irrelevant".
David Tripe, from the Centre for Banking Studies, said that geo-risk models were actually "income maps".
"What a lender is going to do first is look at a person's income.
Since these areas largely reflect income levels, they are probably getting much the same message. Whether the geographic factors add anything to the information isn't clear."
