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Creditinfo localises credit scoring, cites high credit card usage

Published:Wednesday | April 27, 2016 | 12:00 AMSteven Jackson
Creditinfo Jamaica team members Sales and Marketing Manager Camar Williams, at left, and CEO Craig Stephen, at right.

Creditinfo Jamaica, one of a handful of private companies offering credit bureau services, will start producing credit scores that are more localised to reflect realities in Jamaica and be a better predictor of credit approval and default.

Creditinfo offered credit reports before based on a global benchmark it called an 'expert model'. The adjustment takes effect next month.

What the localisation means is that when an institution chooses to use a credit score to determine the risk of their customer, the institution would have a better predictor of the willingness of the person or company to service the debt, the company explained.

Paul Randall, business development executive at Creditinfo Group, said that Jamaica, for its level of development, has a large penetration of credit cards.

Consequently, the model takes that into account while offering different weighting for other variables compared with the global benchmark.

"Because of the concentration of credit cards, that was a shift [from the expert model]. In general, a lot of the same types of variables exist, just a change in the weight," said Randall, adding that interestingly, loans in Jamaica still remain relatively low-risk.

"What was interesting was the impact of new loans. Often, we see a jump in risk with new loans. Perhaps that also reflects that the market is quite conservative," he said. "In some bigger markets, there is a lot more higher-risk lending."




Jamaica's loan market was valued at $544 billion throughout the banking system at the end of 2015. Credit-card transactions in that year topped $212 billion. It reflected an annual increase of 10.6 per cent in the value of transactions, while volumes rose 13.5 per cent to 14.7 million transactions, according to central bank data.

Overall, the average credit score for most people in Jamaica fall within the average or above, said Randall. Consumer scores can range from a very low-risk 900 points, what is an A1 rating, to a very high-risk score of 250 points or E3 rating.

This puts the average risk score within a range of 581 to 616 or C1 to C3, according to documentation from the company.




The localised score model will help both consumers and lenders as it is more predictable than the expert model and therefore affords a better decision process for subscribers, according to Camar Williams, sales and marketing manager at Creditinfo Jamaica. On the consumer side, it offers a more ideal loan-negotiation process as the score would even better reflect the Jamaican reality, he told Wednesday Business.

"Jamaicans can get localised credit scores starting May," Williams said.

"While access to credit scores has been possible since October 2013, the score offered then was based on an expert model. Simply put, the model used then was based on certain features from another market with vast similarities to Jamaica."

The localisation of credit scores typically requires nine to 18 months of consecutive data and a rigorous assessment process.

As a consequence, Creditinfo envisages improvement in the processing of credit while offering consumers a credit score more suited to their situation.

"As pioneers of the credit bureau industry, we are constantly working to improve our product offerings and are happy to introduce the first Jamaican scorecard, 100 per cent derived from the primary lending industries in Jamaica and designed with our local nuances," Craig Stephen, CEO of Creditinfo Jamaica said.

Creditinfo Jamaica launched in 2013 as the first licensed credit bureau. Majority owner Creditinfo Group has a Jamaican partner, Coalesce Credit Solutions, which owns 20 per cent.

The localised scoring model was developed using data held by Creditinfo Jamaica.

The model predicts the probability of an outstanding credit becoming greater than 90 days past due and greater than $1,000 overdue within 12 months, according to the company's fact sheet.