The debate over "credit reporting", including the review by the Australian Law Reform Commission into the merit of a shift from "negative" to "comprehensive" reporting has been largely portrayed as a good old, all-in-brawl - between lenders, credit bureaus and consumer advocates. While this portrayal may be tantalising, this focus is ill chosen. In fact, if this focus does not shift, the opportunity to avoid (or at least reduce in severity) an impending financial calamity may be lost.Why is this so? What should be the centre of attention? And how should this issue be dealt with? The balance of this article will be an attempt to address these questions. 'Houston, we really do have a problem'. A few facts….Australia is in the midst of an historic economic boom. The currency is the highest it has been in nearly 20 years, unemployment is at the lowest it has been in more than 30 years, and interest rates are roughly just one third of what they were (in nominal terms) during the last recession (though up from their lowest levels of four years ago). Yet, despite all of these factors, bankruptcies - a misunderstood indicator - are almost equal to their highest level in 20 years. They are also substantially higher that at the peak levels of the last recession.  What are the driving forces behind this phenomenon? This graph suggests that the excessive use of credit is becoming the number one reason for bankruptcy applications. Already rumours of broad-based initiatives to curtail lending are being suggested. It has also been proposed by some consumer advocates that there is a cause and effect relationship between comprehensive reporting and an expected worsening of this trend. Such arguments, though, are made on quick and superficial analysis. It is highly likely that a heavy handed crackdown on borrowing is more likely to trigger a recession, one which we 'do not need to have'.These signs should not be interpreted as suggesting that the level of lending overall is the root cause. It is, however, a clear sign that credit is, these days, more frequently granted to those to whom it should not be. So it would seem reasonable to conclude that at the very least, there is a deeper issue affecting the quality of some lending decisions. The challenge then comes in determining more precisely the core issue.The average debt to income ratio in Australia reached 160 per cent (as of 2006). To understand whether or not this number is too high it is necessary to consider the factors underlying this measure. Take, for example, an individual's status as a mortgage holder. It is not unusual for someone to have a mortgage of $200,000 and a further debt of $20,000, serviced by an income of $55,000. This scenario would not be outside of the typical guidelines that banks were using to lend 20 years ago. Yet that scenario results in a debt to income ratio of 400 per cent. This is 2 ½ times higher than the