The government-led Credit Information Corp. (CIC) has accredited six credit bureaus whose operations in the Philippines were to help speed up or advance access to credit information and processing in the country.
In a briefing following the start of the Financial Infrastructure Development Network “Conference on Credit Infrastructure ”on Monday, CIC President and CEO Jaime Garchitorena said the CIC board has found all six applicant firms capable or qualified to act as accessing entities.
As special accessing entities, the accredited credit bureaus, that include five foreign-owned entities and one wholly local bureau form the units, will aggregate and analyze the credit performance and history of each individual or corporate borrower in the country.
The five foreign credit bureaus originate from South Africa, Italy, South Asia, Singapore and the United States.
Garchitorena said the operations of the bureaus are premised on the availability of data as far as the relationship with the CIC is concerned.
“Complete of substantial collection of data will happen later this year, probably closer to December 2016 or 2017. We are looking to that timeframe,” he said.
“The whole process for the next year, including the presence of the credit bureaus, is getting the market ready. Starting June we should be able to bring accredited credit bureaus on board to join us in this road show, so that we are credible when we present. Starting June we have names, faces and products to present to these people,” he added.
In the so-called integration process, Garchitorena said the public has to get used to having credit scores, such that the CIC system will undergo a period of adjustment, before the country may reap the benefits of having a credit bureau.
“The credit bureaus themselves have a role in financial education. Because this is a completely new product, people do not understand what having an individual credit score is,” he said.
“The credit bureaus themselves have to undertake a very long—hopefully within a year—process of educating the public,” he added.
Credit scores are important in that they help lending entities, such as banks, to properly gauge how much a borrower, whether a person or a business, may be charged at any time for a credit accommodation.
Prior to the establishment of the CIC, the Philippines had a patchwork of unrelated entities seeking to gauge the credit stature of particular individuals or businesses, and this unweildy system made for a complicated and often costly credit scoring for the borrowers who deserve a better credit assessment than the old system was able to give.
Down the line, the CIC should be better able to assess the credit standing of any borrower in the Philippines, as the special accessing entities get to collate a comprehensive data set.
Once that is done, the cost of obtaining a loan from the banking system should go down over time, the CIC said.