Republic of the Philippines
Both lender and borrower alike must get ready for the data-driven process of giving and receiving credit using the CIC’s Credit Information System (CIS) if lenders are to lend more, lend to more and lend more safely while borrowers improve their access to credit. This was the point stressed by Credit Information Corporation (CIC) President and CEO Jaime P. Garchitorena during the CIC’s technical compliance workshop revolving around the theme “CIC Technical Compliance Workshop: Expanding the Reach” held at the I’M Hotel in Makati City last August 30, 2017.
Speaking before the representatives of cooperatives and rural banks at the workshop, President Garchitorena said that everyone must look beyond mere compliance with CIC’s mandate and instead adopt a “getting ready for credit” mindset in order to maximize the benefits of CIC’s credit information system. The CIC is targeting to make its credit reports available to the public by 2018.
President Garchitorena urged the participants to not be left behind by not using the system, and instead, prepare for the full launch of the CIC’s system by learning how to use the system. Access to the CIC database and the use of credit scores as provided by the CIC’s accredited credit bureaus is widely considered as one of the more significant business tools to hit the Philippine financial market in years.
As a business tool, lenders can use the credit reports of the CIC to identify a borrower’s credit history, minimizing the need for potentially expensive and time-consuming process of traditional credit investigation on a borrower’s transaction history. Containing positive and negative transactional history, CIC credit reports will provide lenders with a fair, reliable and objective tool to assess the payment behavior of borrowers. CIC’s credit reports are updated on a regular basis and are generally no more than thirty days old.
Using CIC’s credit reports in conjunction with credit scores that can be obtained from the CIC’s accredited credit bureaus, lenders will ultimately be able to make more objective and sound business decisions which is expected to significantly reduce their non-performing loans. As a result, lenders will be able improve their credit offerings to creditworthy borrowers. Even for those borrowers to be determined as risky, the transparency offered by credit reports and credit scores will give banks the opportunity to lend; but in order to manage the risk and protect their stakeholders, may require that the loans be secured by further by requiring a co-borrower or collateral. Ultimately, the highly available, up to date, and accurate credit reports should be used to initiate a dialogue with the borrower and find out the reason behind any credit behavior.
President Garchitorena also advised the participants, who may be borrowers themselves, to take the necessary steps in order to get ready for credit. The CIC President and CEO said that for borrowers, they need to be more conscious on how their payment behavior could influence their creditworthiness. As he explained, there are rewards or consequences based on how borrowers pay their financial obligations. Timely repayments can help borrowers to build their creditworthiness, and create opportunities for them to avail of bigger loan amounts at lower interest rates and longer credit terms. As the data-driven lending environment matures, Credit Scores can serve as reputational collateral taking the place of traditional asset based collaterals when applicable. This, in turn, benefits entrepreneurs, specifically in cases where intellectual properties are the basis for their venture.
Beginning 2018, interested parties can avail of the CIC’s credit reports from any of CIC’s four accredited credit bureaus or Special Accessing Entities (SAEs) namely: CIBI Information Corporation (CIBI), Compuscan Philippines Inc. (Compuscan), CRIF Philippines (CRIF), and TransUnion Information Solutions Philippines (Transunion).