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Credit-report system brings major changes

Published:Thursday | October 29, 2015 | 12:00 AMChristopher Serju

Jamaicans need to wake up to the reality that the credit-rating system is in full operation here and already impacting the way business is done locally.

That was the overriding message from yesterday's educational forum on credit reports, hosted by Scotiabank at its commercial banking centre, located at the intersection of Duke and Port Royal streets, downtown Kingston. It is the first in a series of educational activities Scotiabank is moving to implement in order to help its customers.

"We want all Jamaicans - young, old, in-between, men, women, boys, children - to have a full understanding of what the credit report means, and the cultural shift that must take place as regards to paying our loans and our bills," said Stredic Thompson, branch manager of Scotiabank Centre. "Now that all our payments will be monitored and included in a credit report, (as) Jamaicans (we) will all have to pay better attention to managing our finances."


a serious business


The importance for all persons to get up to speed on this local evolution in financial services was underscored by Terrence Cooper, chief executive offer of CRiF NM, one of the companies licensed to generate credit reports in Jamaica.

"Credit reports have already changed the way business is done in Jamaica, it really has," he told the forum which was held in the main banking area, with customers going about their usual business, being able to hear and participate. "Credit reports, the credits score is here to stay, (and) we all need to take it seriously and appreciate and use it to the best of our advantage," he further advised.

This is because now, whenever you apply for a loan, the company can determine your credit worthiness through reports issued by credit bureaus such as CRiF NM. This is based on a three-digit figure that summarises all the credit information contained in your credit report, which in effect, is a rating of the likelihood of defaulting on a loan. So the lower the number, the person is seen as a greater loan risk and higher number indicates otherwise.

Calculated using mathematical algorithms, the credit score is fluid (likely to move up or down) depending on the individual's credit at any given point in time.


integral part of loan process


Institutions which now incorporate a credit report as an integral part of their loan process include the Student's Loan Bureau, Scotiabank, Victoria Mutual Building Society, Jamaica National Building Society, Sagicor Bank, City of Kingston Credit Union, National Commercial Bank, Access Financial Services, FHC Investments Limited and First Caribbean International Bank.

However, Craig Stephens, chief executive officer of Credit Info, the other credit bureau which participated in the forum, explained that a credit report cannot be generated or released without the written consent of the individual in question. He cited Section 11 (3) of Jamaica's Credit Reporting Act 2010, which states in part that, "The Credit Bureau shall not disclose credit information about a consumer to any person ... unless that person furnishes to the credit bureau the consumer's consent in writing to the disclosure."

Penalties for breaching the act include a $2 million fine, or two years' imprisonment upon conviction.

"We want to assure everybody that no information is released without your consent," Stephens declared. So when you go to an institution, we want to assure you (that) if you are not comfortable - you don't want to sign, that there is no pressure. But institutions nowadays, for the most part, are requiring this information. So it's really going to get to a point where you almost have no choice," Stephens noted.

But this is not necessarily to the disadvantage of the consumer, since those with good credit ratings can leverage their good credit worthiness to negotiate for better credit terms.