PH National Credit Information System takes shape with Credit Bureaus

Six firms are seeking to be accredited as special accessing entities (SAE) or credit bureaus for the envisioned national credit information system. These credit bureaus have already submitted their applications for accreditation with the Credit Information Corp. (CIC) to start the gathering of credit information of bank clients to come up with their respective credit scores.

The CIC announced those who passed the initial stage for accreditation as the following: Credit Bureau Singapore, Credit Information Bureau Inc., Compuscan, CRIF, Dun and Bradstreet South Asia Middle East, and the local credit bureau TransUnion.

The credit bureaus are applying to play the role of a Special Accessing Entity (SAE) under Republic Act 9510, or the Credit Information Systems Act. An SAE is defined by law as a duly accredited private corporation engaged primarily in the business of providing credit reports, ratings and other similar credit information products and services.

Once accredited, these entities are granted access to CIC’s pool of consolidated basic credit data, from which the SAEs will formulate the credit scores of bank clients. SAEs may also use other data that they have access to, aside from the CIC’s database, in coming up with the credit scores.

CIC President and CEO Jaime P. Garchitorena said that SAEs would play a critical role in the improvement of public’s and MSMEs’ (micro, small and medium enterprises) access to credit with the development of products in the form of credit scores and other value added services.

Finance Secretary Cesar V. Purisima earlier said MSMEs, which comprise the bulk of businesses in the Asia-Pacific region, do not have the appropriate access to capital because banks are averse to lend money to them without collateral.

But Purisima said MSMEs in the Asia-Pacific region are actually in possession of some $9 billion worth of properties that they could not use as collateral, because banks do not consider these properties, mostly personal properties, as allowable collaterals.

Credit scores are expected to be the first products released by the SAEs and will be based on the credit reports accessed from the CIC as well as other data the SAEs may get from various sources, CIC added.

Once CIC finalizes the accreditation of qualified credit bureaus and opens its database for qualified inquiries sometime in 2016, MSMEs, the general public, corporations, and financial institutions can start benefiting from the credit scores and reports provided by these credit bureaus.

Credit scores and reports to be provided by CIC are expected to expedite the process of loan applications, increase the lending potential of financial institutions, potentially decrease the need for collateral, and help manage the risk of default.

CIC earlier said it targets to launch by the end of the year its credit data system, which will provide access to over three million records. By 2016, Mr. Garchitorena had said, CIC aims to scale up the system to 12 million records.

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