National credit info system to benefit lenders, borrowers

CEBU, Philippines – The envisioned national credit information system will be beneficial for the credit industry in general, an industry executive said.

"The credit bureau itself is a game changer. It is helpful especially for the first-time borrowers and for people who do not have any credit history. It will help them build a credit history," said David Minol, president and chief executive officer of consumer finance provider Home Credit Philippines, in an interview Friday.

The government-owned Credit Information Corp. (CIC) had already accepted applications from at least six companies seeking to be accredited as credit bureaus for the implementation of Republic Act 9510 or the Credit Information System Act.

As defined by law, credit bureaus or special accessing entities are private firms primarily engaged in the business of providing credit reports, ratings and other similar credit information products and services.

Under the Credit Information System Act, lending firms need to report both the positive and negative credit information of their borrowers to the CIC.

"We will provide the information to the credit bureau – both the negative and positive – that this person is a responsible borrower, for example," Minol said.

The CIC is expected to finalize the accreditation of qualified credit bureaus and open its database for qualified inquiries sometime this year. By that time, CIC said MSMEs (micro, small and medium enterprises), the general public, corporations and financial firms can start benefiting from the credit scores and reports provided by the credit bureaus.

The credit scores from bureaus and credit reports from CIC are expected to speed up loan applications, increase the lending potential of financial firms, potentially decrease the need for collateral and help manage the risk of default.

"It can help the business a lot," Minol emphasized.

CIC is expected to receive all basic credit data from banks and financial institutions by the end of 2016.

"It should be operational soon," said Minol, referring to the credit information system which is designed to help establish a transparent, fair and equitable relationship among financial institutions, borrowers and other stakeholders. (FREEMAN)