Sun | Dec 3, 2023

SLB widens net - Noose tightens on debtors as lender gives info to credit agencies

Published:Thursday | August 8, 2013 | 12:00 AM

Nedburn Thaffe, Gleaner Writer

It could prove to be a case of 'long run short catch' for hundreds of delinquent student borrowers as the country's main financier of tertiary education - The Students' Loan Bureau (SLB) - is moving to ramp up measures to boost the level of compliance.

Effective August 15, the SLB will begin to provide credit information on its customers to two recently licensed credit bureaus, which could spell the beginning of trouble for delinquent customers seeking to access credit from other institutions.

"We are hoping that it will impact (the rate of compliance) given the fact that people's ability to utilise credit can be affected. We do hope that many persons will begin to try to organise themselves to repay their loans as best as possible," public relations officer at the SLB Analisa Downes-Allen told The Gleaner yesterday.

The SLB said that come August 15, it will be feeding information to Credit Info Jamaica Limited and Crif NM Credit Assure Limited. The companies will become the outpost for companies seeking to access credit information on its customers.

"The SLB has signed on as aninformation provider to both credit bureaus," Downes-Allen said.

The Credit Reporting Act of 2010 empowers credit bureaus to access credit information from providers of credits such as banks, building societies, insurance companies, National Housing Trust and the Student Loan Bureau, on any of its customers.

In explaining how the process works, the SLB public relations officer said that the credit bureaus can only divulge the information of SLB customers to a third-party company if the person being queried has signed a consent form.

She added, "Everybody who is in our system can be sent to the credit bureau. It's not based on delinquency at all. It's not that SLB will just be sending delinquency information to the credit bureaus.

"It will be given to them on an ongoing basis so that if persons are attempting to get an item, be it a house or a car, they will sign a document with whatever company, giving the company permission to get information from the credit bureau."

President and CEO of ScotiaBank Group Jamaica Ltd, Bruce Bowen, contends that delinquent SLB customers could find themselves under increased burden in the near future, including the burden of heavy interest rates because of their unfavourable credit ratings.

Takes time to build history

"In most markets where there is a credit bureau, it takes time to build up a history, but once the history of information in the credit bureau increases, it will become one of the key components that make up loan decisions," according to Bowen.

Education Minister Ronald Thwaites also said he believes this latest move will help to boost the level of compliance on the part of student-loan customers, given the financial trouble facing the SLB.

"It will assist that, and I would like to inform those who might be careless in making arrangements to repay their loans. This is not to dissuade students from borrowing from the fund, it is to encourage them to borrow, complete their studies and respond responsibly to their obligations," Thwaites said.

Each year, an average of 8,000 students apply for loans at the bureau. The lending agency has long complained about the high rate of delinquency.