THE Credit Information Corp. (CIC) already has the guidelines in place by which the various credit bureaus may be accredited.
CIC President and CEO Jaime Garchitorena said the guidelines should be up and running by next month, such that by December the CIC should also have selected the third-party credit-scoring unit in place.
“Credit bureaus can give lenders a credit score in a matter of seconds. Being complete and up-to-date, we believe that credit scoring using CIC-collected credit reports will be the standard in the Philippine financial market in the next few years,” Garchitorena said at the recent Credit Information System Act (CISA) orientation organized by the Cooperative Union of Cavite.
He explained that if the time required for lenders to get to know their clients is reduced, that should translate into better service to the borrowers while opening up a bigger market and a higher quality loan portfolio for lenders.
The so-called special accessing entities known as credit bureaus are “duly accredited private corporations engaged primarily in the business of providing credit reports, ratings, and other similar credit information products and services.”
He said credit bureaus are essential to the proposed credit-information ecosystem as they create innovative value-added products and services, such as credit scoring and analytics using the CIC’s credit database.
These submitting entities could similarly access the credit database or get the services of credit bureaus to establish the creditworthiness of their borrowers. The CIC will be generating credit reports that will show lenders how much a person owes, how deep their credit lines are and how many loans from how many anonymous institutions they have. The report itself will not give any opinion or analysis about the data.
“Lending institutions will have to infer that for themselves or they can hire a credit bureau accredited by CIC to do that for them. CIC is only a credit-registry aggregating credit information,”
Garchitorena said.
Credit scoring is widely used to establish the creditworthiness of borrowers in other countries and regions like the United States and Europe.
The CIC has conducted CISA orientation and technical training events in the past two years in coordination with its partner, the International Finance Corp., to assist lending institutions in their compliance with the law.
Under CISA, or Republic Act 9510, lending institutions need to forward both the positive and negative credit information of their borrowers to CIC.