SCOTIABANK executive vicepresident for retail banking, Patsy Latchman Atterbury, yesterday urged Jamaicans to pay closer attention to the management of their finances in order to avoid being denied loans by financial institutions using credit reports to determine their creditworthiness.

Latchman Atterbury’s statement comes on the heels of the recent importation of customers’ credit information across a number of financial institutions, as well as the Students Loan Bureau, by existing credit bureaus Creditinfo and CRIF NM. The report shows the financial institutions all available credit information on individuals in the database.

“We would encourage you to check your credit score; it is a very critical transformation that is taking place in our country at this point in time. In the past, we would not have had many consequences necessarily for paying our light and water bills late, but this stuff is going to impact what really comes out as your score as you go forward,” Latchman Atterbury told yesterday’s Jamaica Observer Monday Exchange.

She noted that, upon conducting a background check on each loan applicant, financial institutions are presented with scores that ranges from 250 up to 900 — with 900 being the best — as the credit score for each individual. That number is then used to determine whether the customer’s loan is allowed or denied, as well as the interest rate at which that the loan is provided.

“That score is an algorithm of information from different entities in terms of how you repay your loans in the past. Something as simple as your credit card — which a lot of persons have taken for granted in the past by saying that you’ll pay it but pay it late — those kind of things impact what comes out as your score,” Atterbury stated.

Currently, credit reports are mostly being pulled by financial institutions, however, plans are underway to get smaller financial institutions and utilities companies, including the Jamaica Public Service, National Water Commission, and Flow on board. “Whereas in the past we would have paid late, we now have to become more vigilant in terms of when we are actually making our payments on all of our bills, because this will impact your ability to receive credit in the future,” the executive vicepresident stressed.

Customer credit reports are formed from credit information as far back as 2008, or seven years ago. A score is then determined based on the individual’s payment patterns. “So, let’s take for example, if it is that you have missed one of your payments but you’re known to be good creditor, that will not significantly affect your credit score. It’s the continued late or non-payment, that will bring you credit score down,” Latchman Atterbury stated.

“Aside from that, we do provide the ability to rehabilitate, and I always say recency is a very powerful factor. So you may have had some debt went wrong six years ago, but in the last five years you’ve shown that you have been paying it judiciously then that’s a positive implication.”

Also speaking at the Exchange, President and CEO of Scotia Group Jacqueline Sharp stated that the bank has not changed its policies on how loans are administered, but the credit report acts as an additional tool on which to make decisions. The initiative is expected to reduce the time required for verification, making it quicker and more efficient to access loans, while giving higher credit access to those customers who are without credit history.

Scotiabank has already started a series of educational seminars within its banks to assist customers in understanding how the new initiative will impact them. “Our sense is that the industry is going to move in the direction where a credit report becomes a part of the whole application and adjudication process,” Sharp said. “Ultimately, what the credit report is going to do for us is allow risk-based lending.

So if your score is very low, which is the worst, you might get credit, but the rate might reflect that risk. But if your score is very high, which means that you are the best paying person, then your rate will go in the opposite direction.”

Located in Kingston, Creditinfo Jamaica applied for a licence to operate in the newly legislated credit-reporting environment in 2011. The licence was received in March 2012, and after the fulfillment of preconditions to operate commenced operations in July 2013. Jamaicans over the age of 18 are now entitled to receive a free copy of their credit reports each calendar year from the bureaus to ensure minimal discrepancies with individual scores.