Much thought has to go towards ensuring that credit reporting systems are safe, efficient and reliable. Credit reporting systems are an increasingly important component in today’s financial system. The systematic distribution of consumer credit information between credit providers promotes the efficient allocation of finance within the economy. Through the role of credit reference bureaus, the market has started to benefit from efficient processes for credit evaluations thereby improving the overall cost of credit. Credit grantors no longer rely more on references and sources that are often stale or incomplete.
Instead, lenders consider and utilise information held by credit bureau systems as a primary factor when they evaluate the creditworthiness of individuals. They use the reports generated to monitor the credit circumstances of the consumers.
An important need therefore arises to balance this beneficial system of credit information sharing with the protection of the consumer through a set of standards that enable efficient information sharing and ultimately enhanced financial intermediation. Much thought has to go towards ensuring that credit reporting systems are safe, efficient and reliable.
This is because credit reporting is a vital part of a country’s financial infrastructure and is an activity of public interest. From that background, this article summarises the safeguards we have in place as a credit reference bureau, to deliver credible reports while protecting consumers and their information.
For the consumer, it is important to know that there is a system that safeguards you and your credit information by ensuring that consumer reporting follows a set of protective standards, determining how we use the information we receive regarding your credit. This starts with regulating the number of people who view your personal information so that it’s visible only to those with a reasonable need to see your credit report.
This includes loan processing officers and account managers in credit granting institutions, collection agencies, agriculture contracting companies, insurance companies and property managers. The reports are made available when you approach the institutions applying for credit or other related services.
The consumer report contains information about your credit activity including repayment history on your accounts, and the status of your credit accounts.
This information includes how often you make your payments on time, how much credit you have, how much credit you have available, how much credit you are using, and whether a debt collector is collecting on money you owe. Credit reports also can contain rental repayment information if you are a property renter.
It also can contain public records such as liens, judgments, and bankruptcies that provide insight into your financial status and obligations. It is therefore part of the credit management process to safeguard both the lender and borrower.
Other people in the general public, such as your friends and family members, neighbours, co-workers and acquaintances are not authorised to access such information and are therefore unable to request or even view your credit reports.
As a consumer you can view who has requested your credit report in the last year. To ensure, the reporting of accurate information we have standard data templates used by data providers and training is part of the process that data providers undergo before submitting information.
Before loading the information onto the system, a data validation process is conducted to ensure accuracy. In the event of any inaccurate information being discovered in your file, we ensure that we adequately re-examine the disputed information in a timely manner.
If the inaccurate information cannot be verified we have a responsibility to remove it or to add a statement to your credit file explaining the situation. In our processes, credit granters who furnish information about consumers must do the following:
1. Provide complete and accurate information;
2. Investigate consumer disputes received on data supplied; and,
3. Correct, delete, or verify information within 30 days of receipt of a dispute.
As a tip to ensure that your credit reports remain favourable it is advisable for a consumer to pay their loans instalments and other bills on time. Even if you fell into trouble in the past and defaulted on certain payments, you can rebuild your credit history over time by beginning to make payments as agreed.
Transaction history is typically reported over a 24 month time-frame and paying your debts on time will have a positive effect on your credit score and can improve your access to credit. To help show that you have not borrowed too much, try to minimise how much you owe in relation to your credit limit. If you believe you cannot repay your creditors, contact them immediately and explain your situation.
Ask about renegotiating the terms of your loan, including the amount you repay. In the event of extenuating circumstances and challenges, the credit granting organisations may also help you develop a personalised plan to solve your money problems and safeguard your credit record.
Farayi Dyirakumunda is a Director at XDS Zimbabwe, a Credit Reference Bureau and risk management company. He can be contacted on [email protected] / www.xds.co.zw