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Understanding the importance of Guyana’s first Credit Bureau

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Credit Bureaux are critical elements of a country’s financial infrastructure. They increase access to credit; they support responsible lending and reduce credit losses; and they strengthen banking supervision in monitoring systemic risk.

But apart from the aforementioned responsibilities, a credit bureau plays an even more fundamental role in the lives of consumers. For varying reasons, a consumer could have a history of bad credit thus hindering chances of acquiring loans for important life building asset in the future.

However, Guyana’s only Credit bureau—CreditInfo (Guyana)—can help customers restore their credit worthiness.

It should be noted however that the functions and benefits of the Credit Bureau is not limited to this.

A credit bureau is an organization that collects credit information from lenders and other entities on a consumer, studies it, and uses it to create comprehensive credit reports and other value added services.

The credit report contains biographic information and details of the consumer’s financial obligations and payment history. It may also include a credit score. This is a number used to show the credit worthiness of the consumer to the lender. The figure will allow the company to determine the rate at which the person’s arrears will be repaid.

This report is then provided to banks and other institutions in an organized format for specified reasons only after the permission of the consumer has been obtained.

Guyana is now the 60th country to host CreditInfo Inc., which has its headquarters in Iceland. It has been one of the fastest growing organizations in credit risk management since 1997 and is known to be one of the top suppliers in the industry.

The local company which was officially introduced into the local market on September 28, 2013 after receiving its license to operate on July 15, 2013, established a fixed location at Lot 267B New Market Street, Georgetown.
Its presence was sought in Guyana after it was realized that there was a deficiency in credit history information in the local market.  The Credit Bureau is essentially here because of the need to expand access to credit to the small and medium sized enterprises which employs more than 60 percent of the workforce.

Lack of this data has been noted by Guyana’s Central Bank to be one of the contributing factors to the low level of bank intermediation. The agency also helps entities to reduce losses and to protect against insurance frauds considerably.
Additionally, Chief Executive Officer of the bureau, Judy Semple-Joseph, says that many good Guyanese borrowers may be unable to access credit due to the absence of that history being d properly recorded. Evidence of good credit history is often rewarded, she asserts.

Even if your creditworthiness with entities has reached a poor state, the Credit agency can help you in changing the state of this situation so that you can be in a better position to negotiate with a lending institution for your first loan.

While it does not clear your debts, Sales and Business Development Manager, David Falconer, asserts that the entity informs borrowers on how to make better choices and about various ways in which they can be able to manage their capacity to borrow and pay monies outstanding.

The consumer will then be transformed from being a poor borrower to a reliable one and a record of the now improved history can be had from the company annually for free but at any time at an affordable cost of GUY$1000.

Unfortunately, there are incidents where persons have approached companies under the pretense of another name in order to access credit and or donations. Considering the bureau’s list of partner companies, it is highly likely that this can be prevented, provided too, that the customer is connected to the credit company.

Semple-Joseph said that one of the features of the bureau is that it prevents situations such as those. Falconer added that it is important that companies and citizens to get on board the modern way to protect their identities.

Over the past year the Credit Bureau has established collaborative relationships with all the banks, most of the major utility companies in Guyana and is currently engaging the insurance and retail sectors.
The list includes Guyana Bank of Trade and Industry, (GBTI) Republic Bank Limited, Bank of Baroda, Scotiabank, Demerara Bank Limited, Citizens Bank as well as Hand in Hand Trust and Institute of Private Enterprise Development, (IPED) and major utility companies, the Guyana Telephone and Telegraph Co. and Guyana Water Incorporated.

It is also significant to note that Guyana’s National Assembly passed the crucial Credit Reporting Amendment Bill of 2015 about four months ago.. It was brought before the House by Finance Minister, Winston Jordan. He noted, however,that while the advantages of having a credit bureau are many, it has been over two and a half years since the nation has been able to reap the multiple benefits of offered by such an institution.

Jordan said that an assessment of the reasons for this state of affairs clearly indicates that fundamental to the future viability of the credit bureau, and of it having a positive impact in the economy, is enabling legislation.

He said that this would involve tweaking the existing legislation to “give it more teeth”. At the same time, Jordan said that a concerted effort will have to be made to mount a public information campaign that is geared towards attaining the necessary buy-in by all the stakeholders.

The Finance Minister said that the amendments to the Bill will ensure that the Guyanese market will benefit from the bureau’s operation and reach the ultimate goals.

These include; the majority of all loan applications processed within one to two days; a decrease in default rates by at least 25 percent; increased access to credit which can raise the ratio of private credit to the Gross Domestic Product (GDP) by between seven and eight percentage points; and a decrease in interest rates, due to decreased default rates.

He further explained that the proposed amendments to the Credit Reporting Act No. 9 of 2010 [CRA] are aimed at creating a legal framework which enables a credit bureau to operate effectively in the market; and ensures that lenders, borrowers and the economy as a whole benefit from an efficient credit reporting industry.

He said that specifically, “the strengthened legislation will mandate regulated credit information providers to upload credit information to a licensed credit bureau; mandate utility companies to upload credit information to a licensed credit bureau provided that the government is the majority owner; require credit information providers to obtain the consent of data subjects prior to submitting a request to a credit bureau, with a view of obtaining credit information; authorize credit information providers to upload credit information to a licensed credit bureau without consent having to be given by the data subject; and mandate regulated credit information providers to pull a credit report before granting credit”.

The Finance Minister said that the proposed amendments have had the benefit of the experience of Creditinfo Guyana and best practices of other jurisdictions as well as those developed by the International Finance Corporation (IFC).

Your rights with the credit bureau
·    If the credit bureau divulges your credit information in contravention of the Act, it would be committing an offence and therefore liable on a summary conviction to a fine of one million dollars.
·    Every consumer is entitled to one credit report per year, free of cost. This will enable you to identify the areas in which you need to pay attention to, in order to improve your credit score and stands ready to provide guidance in this regard.
·    Your file has to be maintained and regularly updated by the Credit Bureau and stored in a secure manner from any misuse, loss or unauthorized access.
·    All information received by the Credit Bureau, its users and information providers about you are required by law to keep it confidential.

 

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