Non-bank debt defaulters likely to reoffend

Consumers defaulting on utilities and telecommunications debt are more than five times more likely to default on other credit products, according to research from consumer credit reporting agency Dun & Bradstreet.

The 90,000 strong data pool identified no significant correlation between the dollar value of defaults and the likelihood of recurrence, with a consumer defaulting on debt of more than $500  just as likely to repeat this behaviour as a consumer defaulting on the lowest recorded tier of between $100 and $500.

Individuals defaulting on utilities are 6.5 times more likely to default of other types of credit, with recurring defaults in the telecommunications and finance sector 4.5 and 3.8 times respectively.

Consumers with outstanding defaults are 5.9 times more likely to continue defaulting, with those who have repaid outstanding debt still 3 times more likely to reoffend.

Christine Christian, CEO at Dun & Bradstreet, said the government, lenders and borrowers should consider the implications of the research results carefully.

"Under Australia's current system a lender's ability to assess credit applications is hindered by the limited amount of information that can be included on a report."

The Australian Law Reform Commission earlier this month released draft recommendations for a consumer credit reporting model that allows credit bureaus to store additional pieces of information in credit files.