Credit bureaus can now access light, water bill infoSunday, September 21, 2014
BY TERRON DEWAR Business reporter firstname.lastname@example.org
CREDIT bureaus can now collect information on customers of utility companies.
Finance Minister Peter Phillips signed an order under the Credit Reporting Act enabling them to do so.
"Utilities capture the very basics of your operations and give a good indication of your financial stability," said PSOJ CEO, Dennis Chung.
Chung, however, believes that the information required to be submitted to credit bureaus should be further extended to include delinquent tenants and companies reported to strata corporations for failure to honour their obligations.
Adding the records of tenants who neglect to honour their commitments to their landlords will create a more complete and accurate report that will serve to create greater insight into their credit history.
"We need to get as much credit information as possible," as this will improve the credit environment in Jamaica, as lenders will be better empowered to manage their risks and to tailor instruments based on the risk propensity of individual customers.
Soon to be gone are the days when everybody who walks into the bank gets the same interest rates because the banks cannot determine their risk exposure, Chung said.
Already, some borrowers in the personal loan market have been adversely affected by reports from credit bureaus, according to the Bank of Jamaica credit conditions report.
A reduction in the approval rate of secured credit from lenders over the December 2013 quarter has been linked to increased screening due to the operations of credit bureaus, according to an earlier version of the same report.
Over 20 financial institutions are currently using the databases of credit bureaus to help them design credit facilities and analyse their risk, said Camar William, sales and marketing manager at Creditinfo Limited.
For a fee, and with the consent of the consumer to whom the information pertains, prospective lenders can access information from a credit bureau to help determine their risk exposure.
At this point, credit reports are not just being used to determine if someone gets credit or not, it also influences the type of credit that they get.
The use of credit reports in Jamaica is not too far from where it ought to be. Within a year or two, the country should reach a level where the reporting of information to credit bureaus and the use of such to design credit facilities and assess risk will be common practice.
The utilities have all indicated their willingness to report customer information, They appear to have just had discussions about the requirement thus far.
"Due to the fact that we are still in the very early stages of discussing this process, we are not in a position to speak definitively on how Jamaica Public Service Company (JPS) will be involved," said Audrey Williams, Communications Officer at JPS.
Without indicating the extent of their preparations, LIME's Corporate Communications Manager Elon Parkinson said, "As a regulated entity, we are prepared to work with approved licensees under the Credit Reporting Act to establish credit information sharing along stipulated guidelines."
Digicel and the National Water Commission (NWC) did not respond to the Observer's queries up to press time.
The process of reporting customer information to credit bureaus is not a difficult one, said Camar William, Sales and Marketing Manager at Creditinfo Limited.
Getting started "usually takes a few meetings to discuss the type of information needed and the format in which it is required", said Williams.
The web-based system usually requires an information technology (IT) technician to write a computer code that will send the necessary information from their databases to the bureau.
So far, they have not yet met with any of the island's major utility companies, but getting information from the utility companies will definitely add value to the credit reports.
Creditinfo currently has over 50 signed agreements with companies who have committed to being credit information providers (CIPs), but only 16 institutions are currently doing so.
Incomplete records, which oftentimes lack the tax registration numbers (TRN) of customers, that Creditinfo uses as the unique identifier to match and merge credit records are noted as one of the major obstacles in transferring the data.
Some challenges will be to get the information that is required from their databases because a lot of companies do not keep records of the information required.
The institutions who are already sharing include all major commercial banks, two building societies, the Students Loan Bureau (SLB), a hire purchase company and the development bank of Jamaica.
To date, Creditinfo has a database of over 650,000 unique credit reports on over 300,000 individuals.