What is a Credit Bureau?

A credit bureau is an organisation that collects credit information from lenders and information from other sources on a consumer, processes that information and uses it to create comprehensive credit reports and other value added services. This amalgamated information is supplied in an organised format to banks, other lending institutions, or to other persons or entities for specialised purposes, but always with written permission of the consumer. The consumer may also be provided with a copy of his/her credit report upon request.

What would the Credit Bureau do with the information it collects?

The credit bureau will process the information collected. Processing of the information involves matching, crosschecking, merging, analysing and interpreting the information. Everything possible is done to ensure that the information is accurate and relates to the specific consumer, then the credit bureau compiles the processed information to create a credit report and credit score.

What is a Credit Report and what does it show?

A credit report is a report that is generated by the credit bureau using the information it collects. The credit report gives a comprehensive profile of a consumer including biographic information and also details the consumer’s financial obligations including their payment history in relation to such obligations and of any guarantees that may exist. It may also include a credit score.

What is a Credit Score?

A credit score is a statistical estimate of the probability of default of an existing or prospective borrower based on characteristics available in the information that the credit bureau has collected. A good credit score has significant benefits for a consumer as it related to obtaining credit and other services.

Is this system new?

No. For many years the banks have been sharing information about borrowers informally between themselves. Creditinfo only makes the existing system more efficient and the credit climate more agreeable to consumers by making lots more useful information available.

How would the information (the Credit Report or Credit Score) from the Credit Bureau be of benefit to me?

Information from the Credit Bureau would allow a lender to more accurately assess your creditworthiness. This would enable lenders to better assess the risk of each credit application and price the loan/credit accordingly. As such, potential borrowers with good credit histories can benefit from reduced lending rates. You can take your credit report from one financial institution to another in an endeavor to obtain better terms of credit, making lending markets more competitive, and in the end more affordable. In this way, the market rewards you for honoring your financial commitments to your creditors and other entities.

How can the Credit Bureau be of benefit to the economy and country?

Credit Bureaus tend to foster stability in the financial sector and by extension, the economy. A study of credit markets over the last 25 years shows that increasing the quality and reach of information sharing is strictly associated with GDP growth. It increases access to credit for a larger segment of the population, this improving general standards of living, encouraging investment and stimulating economic growth.

Are there any other benefits?

Faster and more comprehensive access to information means reduced processing times, reduced costs and easier access to credit for applications at banks, micro-finance institutions (MFIs), hire purchase agents and others. Less bad credit in the market will mean more funds available to lend to qualified borrowers. Credit reporting allows borrowers to build a credit history. This is especially useful for small enterprises and new borrowers who have limited access to the usual forms of collateral, and who can now leverage their good credit report and score to obtain approval for loans and other forms of credit.

Do I have to give my consent for any entity to share information that it may have about me as a consumer of its products or services?

The Credit Reporting Acts in each country are very specific – no one can provide any information to the credit bureau without the prior consent of the consumer. This consent shall be obtained at the time of applying for a credit facility and is contained on the credit application. Consumers who already have credit facilities would also be asked to give consent after the fact.

Could the Credit Bureau share a consumer’s credit information with anyone?

A consumer’s credit information can be shared with credit information providers who intend to use the information to extend credit to the consumer, but only with the consumer’s written permission.

Credit Bureau Explained