Six 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 five international and one local credit bureaus submitted their applications and supporting documents during a ceremony held earlier this week. 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 Garchitorena said SAEs play a critical role in providing micro, small and medium-sized enterprises (MSMEs) access to credit.
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.
The Asia-Pacific Economic Cooperation (Apec) meetings hosted by the Philippines this year, thus, focused on how to help MSMEs flourish, such as providing them access to capital and tearing down trade barriers to provide them with a wider market across the Asia Pacific.
The coming up of updated credit scores of bank clients is expected to allow banks to reduce the risk of lending money to those with credit scores, possibly even without collateral, since banks would then have data on the credit history of the particular person or MSME that they are lending to.
Once CIC finalizes the accreditation of qualified credit bureaus and opens its data base 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 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 is expected to receive all basic credit data from banks and nonfinancial institutions by the end of 2016.