The Role of the Credit Bureau
What is a Credit Bureau?
A credit bureau is an agency that collects credit information from lenders and other relevant credit information sources on a borrower’s credit history and provides that information, for a fee, to prospective lenders. Information acquired from a credit bureau allows a lender to better assess the creditworthiness of a borrower.
What is the Credit Reporting Act?
The Credit Reporting Act 2023 provides for the licensing and operations of credit bureaus in the Eastern Caribbean Currency Union (ECCU). It is an Act to “provide for the sharing of credit information between specified bodies, the licensing of credit bureaus and for connected matters”. The Act was passed on March 14, 2023. The Act is created to ensure that credit reporting is done through reasonable procedures that meet the needs of commerce for credit information in a manner that is Fair and equitable to the consumer.
Who is a Credit Information Provider?
The legislation provides for which types of entities may be credit information providers to a Credit Bureau. They are,
- (A) A bank licensed under the Banking Act
- (B) A financial institution licensed under the Financial Institutions Act.
- (C) A building society licensed under the Building Societies Act.
- (D) A society registered under the Co-operative Societies Act.
- (E) A dealer in securities who is licensed under the Securities Act.
- (F) Any person who carries on the business of selling goods under hire purchase, credit sale or conditional sale agreements, as defined by the Hire Purchase Act.
- (G) A person who publishes information on suits and judgments for debt claims.
- (H) A credit bureau.
- (I) An insurance company registered under the Insurance Act.
- (J) The National Housing Trust.
- (K) The Students’ Loan Bureau.
- (L) An entity exempt from the provisions of the Money lending Act by section 13 of that Act*
- (M) Such other body, other than an individual, as the Minister may designate to be a credit information provider by notice published in the Gazette and in at least one daily newspaper in circulation throughout Jamaica.
What type of information do credit bureaus collect?
Under the Credit Reporting Act, a credit bureau can collect the following types of information on consumers:
- Information about the consumers’ financial means and creditworthiness in relation to transactions involving the borrower
- The amount and nature of loans and advances or other credit facilities granted to a consumer
- The type of security taken from any consumer in respect of credit facilities (including lease financing and/or hire purchase)
- The nature of any guarantee or other non-fund-based facility accessed by a consumer history of financial transactions in relation to transactions involving the borrower
Analysis of the above information including conclusions as to creditworthiness which may be in the form of numerical or alphabetical scores.
How did the credit bureau get my information?
EveryData ECCU (formerly Creditinfo ECCU) signs agreements with eligible entities for them to provide credit information on their credit customers which then entitles them to access our database of credit payment histories. The information sent to the bureau includes up to seven years of history of how you handled your financial obligations to them.
What products will be offered?
- Consumer Credit Reports
- Business Credit Reports
- Credit Scores
What is a Credit Report?
A Credit Report is a summary of your experience with credit-related accounts. Aside from some basic personal information, like your name and address to help identify your report.
There are three main types of information on your Credit Report:
- Accounts: Payment history on all your Real Estate, Loans, Hire Purchase and Revolving Credit Accounts.
- Public Records: Court-related information, including bankruptcies, court records, tax liens, monetary suits and judgments.
- Credit Inquiries: Types of businesses that have obtained a copy of your Credit Report. (If you access your own report the actual names of the enquirer will be shown).
The Credit Report will not include information any credit information older than 7 years.
What is a Consumer Credit Report?
This is a report outlining all of the details of credit transactions in which the individual is or was involved with the institutions that provide their information to our credit bureau. It will also include any other information available from public sources from which we access data such as company involvements; suits and judgments and current and past addresses.
What is a Business Credit Report?
A Business Credit Report is similar to the consumer credit profile. However, the information will be relevant to all companies and businesses in Jamaica, including micro small and medium enterprises (MSMEs).
What is a Credit Score?
A credit score is a number assigned by a mathematical algorithm that converts qualitative data from the historical credit information on a credit report into a numerical score. This number represents the assessed risk associated with extending credit to an applicant based on their credit history.
What is Risk Management?
Risk management is the process of correctly assessing the risk associated with a specific activity and then putting in place the appropriate tools to manage and reduce, if not eliminate, that risk. It places a value on the costs associated with managing that risk and so seeks to price the associated services, for example, interest rates, in order to recover the cost of those services.
Who Can Request a Credit Report?
- The Consumer may request his/her own credit report for themselves or to be sent to a Third Party.
- A credit provider (e.g. banks) may request a credit report on behalf of a consumer who does business with them and who consents in writing to the credit bureau providing that institution with his/her credit report. A credit bureau may also be required to provide information pursuant to a Court Order in the course of investigations conducted under certain specific circumstances.
Can I find out who has requested my credit report?
A consumer can request their own report from the credit bureau and this will outline all information about them that is in the credit bureau’s possession. This includes the name and address of every entity to which disclosures were made during the six-month period immediately preceding the date of the consumer’s request. A consumer may request their own report without cost, once in each calendar year. Subsequent reports in a calendar year may be had at a small cost.
How can I be sure that my credit information is not accessible to non-authorized users (hackers)?
The highest level of security measures have been implemented by our IT team and includes standard password security, firewalls, encryption technology and other security measures. We will also maintain a registry of the CIPs that pull your credit report where information from this registry is represented in reports provided directly to you.
How Can I Obtain my Credit Report?
Three options will be offered to obtain your credit report:
- Request it in person at the offices of EveryData ECCU Limited (formerly Creditinfo ECCU Limited)
- Request it through one of our credit information providers (to be launched)
- request online using our online interface (to be launched)
In all cases, proper identification will be required.
Do I need both the Credit Score & the Credit Report?
A Credit Score is a separate product from our Credit Report. The Credit report shows credit history and the Credit Score is an analysis of that credit history. Both will be able to be used together or interchangeably depending on the type of product the financial institution is offering. Each consumer is entitled to one free credit report per year which does not include the credit score. The score is available for a minimal fee.
How much does it cost to obtain a copy of my credit report?
A consumer is entitled to receive a free credit report from us in each calendar year on submission of a written request. Any subsequent requests by the consumer will require the payment of the fees (to be announced).
Will my Credit Score change?
Your credit score will change as your credit report changes. When new information is added to your credit report; whether debt repayments, new credit facilities, debt retirement etc. or information older than seven years is removed, the report will change.
Will there be a Credit Report or Score for everyone?
If you have no credit history with one of the credit information providers in our database, you probably will have neither a credit report nor a credit score available from our credit bureau. Consumers will need to learn to build a credit history by accessing credit, even if not required and repaying according to the agreement. A simple credit card can provide a history.
What is the Credit Score range?
The credit score range to be used by EveryData ECCU (formerly Creditinfo ECCU) will be 250-900 with 900 being the best possible score demonstrating the least risk to a creditor.
What is a good Credit Score?
It is difficult to absolutely define ‘good’ out of context since different institutions will focus on different segments of the scoring range as their target market. However, a credit score that is higher than 550 would probably be considered ‘good’.
What information goes into calculating a Credit Score?
Credit scores use information from three key areas of your credit report: account information (such as credit cards, auto loans, student loans, and mortgages, etc.), public records (such as tax liens or bankruptcies) and inquiries (requests by lenders to view your credit). Information such as race, gender, where you live and marital status are not used in credit scores.
What should I do if there’s a mistake on my Credit Report?
If you see something that is incorrect on your Credit Report and want it corrected, you have two options available. You can either contact the institution reporting the incorrect information directly or you can file a dispute with the credit bureau. The Bureau is required to verify and correct all incorrect information on a consumer’s report.
How long does it take for action to be taken once a complaint is filed?
Once a complaint is made to a credit bureau, the Bureau should take steps such as to confirm, correct or complete the information no later than fourteen days after the complaint has been made.
How is corrected information passed on by a credit bureau to creditors?
Whenever credit information has been amended a copy of the amended report is sent by the credit bureau to every institution/person to whom the credit bureau disclosed the inaccurate or incomplete information. The consumer is also notified when the necessary changes have been made.
How can information provided by the credit bureau be used?
A credit information provider can use the credit information for facilitating the extension of a loan or other credit facility to the consumer. In addition, once permission is granted by the consumer, credit information can also be used by a credit information provider for:
- Facilitating a financial or other commercial transaction involving the consumer
- Underwriting of insurance involving the consumer
- Purposes of employment of the consumer
- Other purposes in accordance with the specific written instructions of the consumer
How does information from a credit bureau benefit the average consumer?
Information from a credit bureau allows a lender to more accurately assess the creditworthiness of a borrower. This enables lenders to better assess the risk of each credit and price the loan accordingly. Therefore, potential borrowers with good credit histories can benefit from reduced lending rates and have a stronger negotiating position.
Who or what determines if I get a loan?
Banks, credit card companies, auto dealers, mortgagors and other lenders decide if you get your loan. Most businesses that issue credit or loans will use credit scores to summarize a consumer’s credit history. Other factors are also used in determining whether or not you receive the credit you applied for — such as income versus the size of the loan — however, a credit score is a leading indicator of one’s basic creditworthiness. Credit Bureaus do not make lending decisions.
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