A credit bureau is a data collection agency that gathers account information from various creditors and provides that information to a consumer reporting agency in the United States, a credit reference agency in the United Kingdom, a credit reporting body in Australia, a credit information company (CIC) in India, Special Accessing Entity in the Philippines, and also to private lenders. It is not the same as a credit rating agency.
A Consumer Reporting Agency is an organization providing information on individuals’ borrowing and bill-paying habits. Credit information such as a person’s previous loan performance is a powerful tool to predict his or her future behavior. Such credit information institutions reduce the effect of asymmetric information between borrowers and lenders, and alleviate problems of adverse selection and moral hazard. For example, adequate credit information could facilitate lenders in screening and monitoring borrowers as well as avoiding giving loans to high risk individuals. This helps lenders assess credit worthiness, the ability to pay back a loan, and can affect the interest rate and other terms of a loan. Interest rates are not the same for everyone, but instead can be based on risk-based pricing, a form of price discrimination based on the different expected risks of different borrowers, as set out in their credit rating.
Consumers with poor credit repayment histories or court adjudicated debt obligations like tax liens or bankruptcies will pay a higher annual interest rate than consumers who don’t have these factors. Additionally, decision-makers in areas unrelated to consumer credit, including employment screening and underwriting of property and casualty insurance, increasingly depend on credit records, as studies have shown that such records have predictive value. At the same time, consumers also benefit from a good credit information system because it reduces the effect of credit monopoly from banks and provides incentives for borrowers to repay their loans on time.
Credit Information Corporation or CIC announced the first six credit bureaus in the Philippines last 13 March 2016. The accredited credit bureaus are consisting of five international firms and one local credit bureau. According to CIC President Jaime Garchitorena, bureaus may start operations as soon as they become incorporated, but actual offering of products may not happen until 2017. The complete and substantial collection of credit data, may be finished closer to end of 2016 or early 2017.
Accredited Credit Bureaus
- CIBI Information, Inc.
Also known as CIBI, formerly known as Credit Information Bureau, Inc., is historically the first credit bureau in the Philippines. CIBI started as a quasi-government body under the Central Bank of the Philippines to initiate a credit information exchange system in the Philippines. In 1982, CIBI was founded and established through the power of Presidential decree 1941 and was created under Central Bank of the Philippines, now Bangko Sentral ng Pilipinas (BSP); the Securities and Exchange Commission (SEC) and the Financial Executives Institute of the Philippines (FINEX).
In 1997, Credit Information Bureau, Inc. was incorporated into a private entity and became CIBI Information, Inc. At present, CIBI is a provider of information and intelligence for business, credit and individuals. The company also supplies compliance reports before accrediting suppliers, industry partners and even hiring professionals. Marlo R. Cruz is the current President and CEO of CIBI.
- TransUnion Philippines
A local office of a Chicago-based firm which recently partnered with banks in the Philippines in 2011.
- Compuscan Philippines
In October 2015, Compuscan Philippines Inc., a subsidiary of Compuscan, opened its doors in Manila, Philippines, where the Credit Information Corporation (CIC) licensed Compuscan as a Special Accessing Entity (“SAE”).
- CRIF of Italy