Creditinfo Guyana, located in the heart of Georgetown, is the second regional presence of the Creditinfo Group and the first ever credit bureau in Guyana. Creditinfo Guyana entered the group in 2012 and its Chief Executive Officer is Judy Semple-Joseph. This week, we feature some of Bureau’s list of Frequently Asked Questions, so you can be informed about the work of the Burea and how this affects you.

What is a Credit Bureau?
A credit bureau is an independent organization that collects, stores, and organizes credit information about consumers and businesses.

This information is sourced and collected from lenders such as banks, credit unions and microfinance organizations, as well as providers of various alternative types of credit such as hire purchase companies, telecommunication companies, and utility companies such as Guyana Water Inc. and Guyana Power and Light Co.
These disparate data are then subjected to a rigorous process of matching, cross-checking, merging and analyzing. Everything possible is done to ensure that the information is accurate and relates to the specific data subject.
This processed information is compiled and used as input to create comprehensive credit reports and other value added services provided by the Credit Bureau to its customers.

Why do we need a Credit Bureau?
Credit bureaus are important elements of the financial infrastructure that facilitate access to finance. Easier access to finance is a significant driver of economic well-being in any country, but more particularly for those countries in the developing world such as Guyana.

Today, less than 25 percent of the people living in developing countries have access to formal financial services, compared to up to 90 percent in developed markets. Financial sector development is seen to empower the productive power of businesses and bring the informal sector into the formal economy, a very necessary process.

Banks play a central role in extending financial services within an economy. A long standing problem that has plagued the lending environment in Guyana is what the industry calls Information Asymmetry, a formal term used to describe a situation where one party to a transaction has more information than the other which can give rise to a particular circumstance called Adverse Selection. In order to protect itself the response of the credit provision industry has been in the form of higher interest rates, increased costs imposed on borrowers to facilitate their particular due diligence process, and sometimes long and tedious periods of waiting for approvals or denials.

For most people, credit is an important part of their life. There are few people who do not have some type of credit arrangement serviced by payments at regular intervals, such as a personal or business loan, a credit card, and overdraft facility.
Even those “unbanked” persons who do not possess any of the bank products/ facilities on the list can still consider themselves credit customers of some regard, as long as they have a postpaid phone, water or electricity service in their name or an account at any hire purchase provider such as COURTS or Singers.
Credit is everywhere, and so therefore is the necessity to document its individual patterns and histories. The main task of the credit bureau is therefore to make credit easier to obtain by those who need it. It’s a win-win situation for both lender and borrower.

Who controls the way the Credit Bureau does business in Guyana?
The Credit Bureau is licensed to operate under the Credit Reporting Act of 2010, and the Credit Reporting (Amendment) Act 2016. These two pieces of legislation clearly set out the manner and means by which the credit bureau may go about its business in Guyana.
The practical aspects of enforcement falls to the Bank of Guyana in its capacity of regulator in the banking and financial industry. Among other things, the principal Act specifies which entities may share information with the bureau, and which entities are entitled to access the data in credit report form under the mandate of permissible purpose.
Every aspect of the credit bureau’s operations is closely monitored and regulated by the Bank of Guyana in line with the requirements under the Act. There are severe monetary and punitive consequences attached to even the slightest infraction of the Law.

What is a Credit Report?
A credit report is simply a summary of all credit related and public information that the bureau has collected and stored on a particular data subject. This information would typically include biographic data, details on a person’s financial obligations and payment history in support of these obligations, collateral given for any credit facility and details of any guarantees that may exist.
This means that when someone applies for some form of credit, the prospective lender can check to see what kind of borrower they have been in the past, and can use this to determine how they will repay in the future. This is called RISK ASSESSMENT, simply because it essentially seeks to quantify the level of risk the lender is taking by offering credit services to the prospective borrower.
There are various types of credit reports available, including a particular report that contains a CREDIT SCORE.

What is a Credit Score?
A credit score is a number that is derived from a comprehensive analysis of credit data available on a particular borrower. It ranges from 250 (lowest score) to 900 (highest score) and applies a summary of everything that is contained in the credit report into a single numerical indicator. More simply, it is a particular number that indicates how good a credit risk an individual is likely to be based on how he has behaved in the past, taking into consideration factors such as current financial obligations and some other specific indicators.
It is accompanied by the Creditinfo Predictor, which is a statistical estimate of the probability that a borrower will default on a credit facility, also based on characteristics available in the vast store of information collected by the credit bureau. The information contained in a credit report is entirely factual. The credit bureau does not express any opinion about the consumer to whom the data pertains.

Why is a Credit Report needed?
When someone applies for credit, the lender is interested in finding out as much as possible about them, so that an accurate assessment can be made of their likelihood of repayment.
Borrowers are typically called upon to provide information that would prove their creditworthiness, which always involves several face to face meetings and lots of paperwork.
In many cases a lender extending credit may never have an opportunity to truly learn what type of person the borrower is, or to discover for themselves in advance if they are trustworthy, capable individuals. Often, all they have to make a judgment from is the information on the application form, and whatever additional data may be forthcoming through discreet inquiries to other financial institutions. In truth, this is far from the whole picture because an ability to pay can only accurately be assessed by looking at your credit history – which is a complete accounting of your ability to repay debt.
To do otherwise is like playing darts in bad light, with your target far away. A true hit-or-miss situation.
The various credit reporting services offered by the Bureau supports the decision process by providing all the credit information that is available – and it does so quickly (mere seconds or minutes).

How important are the Credit Report and Credit Score?
A credit score is one of the most important numbers in a person’s life. In the developed world, a credit score can have significant implications for many essentials of daily living. Here in Guyana where we are now at the threshold of development in this aspect of the credit provision environment, this too will soon be the case.
The less risk a person represents based on their credit history, the more access they will have to various forms of credit at lower rates. The credit score indicates on a sliding scale how high this risk is likely to be, and the report gives the details that provide the score.
Think about it like a job interview. A boss can either hire someone with no training straight out of high school or someone who has worked for 10 years. Should the boss risk hiring an untested and inexperienced person whose abilities are unknown or give a chance to the one with experience? A number of executives would choose option #2, simply because they feel more comfortable that they know all they need to, and can judge accordingly.
Therefore, the reason why NO CREDIT HISTORY is worse than having a bad credit history is because the latter situation gives lenders something to base their decision on. They can factor in the events that led to bad credit (if they exist) and see if there would be potential problems. Prospective borrowers will have a chance to explain their circumstances.
For example, bad credit could be linked to loss of a job, sickness or something else that saw a reduction in income. If a borrower has been working on his credit or recently saw an increase in income, the lender may be able to overlook a bad report. He may not be able to look past the fact that there is no credit history at all since he may very well conclude that there are worse things in the past as yet unrevealed. Note that a credit score is dynamic and frequently changes as new information is added to the credit file.
Now that a credit bureau is fully operational in Guyana, lenders are mandated to obtain the credit history of a person or business before considering any type of facility.

Why do Lenders use Credit Reports and Credit Scores?
Credit scores give lenders a fast objective measurement of an applicant’s credit risk. Before the advent of credit scoring and credit reporting, the credit granting process was usually slow, inconsistent and often unfairly biased.
Lenders can use these tools to speed up loan approvals to borrowers who score above a certain threshold. Borrowers with scores just at the threshold or below may be asked to submit additional information or may qualify for different terms.

Can a bank, or anyone else share my information without my permission?
YES. The Credit Reporting (Amendment) Act 2016 provides in law for all lenders to be allowed to share credit information that they may have on file for their borrowers with the Bureau. However, the confidentiality of your credit information is always protected by the requirement that you must first give permission in writing before anyone can see your credit report.

What can the Credit Bureau do for me?
– Collateral support for credit applications
Access to financial history allows a lender to see the entire credit profile. Factoring in hire purchase records, phone, water and electricity account records as well as bank history into a credit report gives a consumer the best chance at a good report. This may give lenders the confidence to modify their usual collateral requirements for securing credit by taking into consideration a good reputation built on the way a borrower has approached ALL other obligations.
That much needed loan may be just an application away.

– Lower rates of interest
Consumers can easily qualify for lower rates of interest in the long term on loans and other credit related services, as lenders can now quickly evaluate how good a borrower is likely to be. Since the credit report and score represent a reliable indicator of risk, and interest rates at lending institutions are fixed in response to perceived risks, a borrower may qualify for a more competitive rate of interest on a credit facility.

– Faster approval of credit applications
Access to a credit report is facilitated quickly and easily through a web portal. This means that the interviewing officer does not have to leave their desk to see what they need to in order to arrive at fair and just assessment of someone’s credit position.
An application can now be processed a lot faster than before.

– Cost savings !
Since it is no longer necessary for your potential lender to engage scarce and costly resources to verify your application data and credit history, these cost savings can be passed down to you in the form of reduced processing charges for loans, or better rates of interest.

Can anyone see my personal information?
No. The Credit Reporting Act is quite specific on this point, and even if it were not, the Credit Bureau has very strict operational guidelines and policies regarding confidentiality of data. Information is, after all, our stock in trade and we must take the trust of our data subjects very seriously.
The bottom line is: No one can walk off the street and request a credit report on anyone but themselves. Furthermore, the credit bureau does not even get to decide on the companies that participate in the Credit Bureau program.
This list has been identified in the Credit Reporting Act as a narrow specific group of entities that include only Banks, Microfinance Institutions, Insurance Companies, Hire Purchase merchants and a few more. Any addition to this exclusive club of lenders must first be approved by the Bank of Guyana. Further, you must first give permission for any of these authorized entities to view your credit report.

How and where is my information stored? Is it secure?
All data is and will always be one hundred percent safe from unauthorized access. First of all, no paper files are created for storage, and nothing is stored locally. All credit bureau data is in digital form and is stored offshore in a Tier Three Data Storage Facility. This is the highest level of security in the region, and the second highest that can be found anywhere in the world.
The Credit Bureau has gone through a great deal of trouble and expense to be satisfied that it has fulfilled its mandate of trustworthiness and security. We operate at the highest level, which more than fulfils international and local requirements. Further, we employ a highly experienced IT team equipped with the best available technology to support our systems.
The system implements all necessary security features in order to host sensitive data using standard security for the encryption of data transmission, audit trail and IP filtering.

Is a Financial Institution allowed to access a report on someone who is not its current or potential customer?
The Credit Reporting (Amendment) Act of 2016 provides that you must first give permission in writing before any lender can access your credit report. If you choose to decline permission, they are not allowed to access our system to check on your credit. This means that, at minimum you must be applying somewhere for credit.
This is one of the principal reasons why the credit bureau logs all enquiries and why the consumer report will list all entities who have accessed reports on a particular data subject. This means that a consumer can evaluate who has seen his report and verify for himself that there has been no unusual activity.
The law provides for severe penalties in such a case, as does the policies of the credit bureau as set forth in its agreements with its data providers.

Can my credit report or score be ruined by one item?
NO. One bad aspect of a credit history will certainly have some impact on the outlook of a report and score but when balanced against input such as can be obtained from the other contributors of data, the net effect of this wide reach may and probably will still be positive.