The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Only loan agreements entered into after the Credit Bureau’s introduction will be included in its records, the Central Bank Governor said yesterday, adding that the “only exception” would be outstanding court judgments.

Wendy Craigg told a Bahamas Institute of Chartered Accountants (BICA) seminar that this would be done because outstanding judgments continue to have an affect on a person’s credit rating as long as they remain unsettled.

“There is some trepidation that credit growth will be dramatically impacted by this initiative, given the present debt profile of consumers, which we know is quite high,” Mrs Craigg said.

“We recognise that since the 2008 financial crisis, many persons and businesses have gone through a very difficult patch with their finances. We have certainly taken this into consideration.

“Generally, the idea is that only loan agreements that are entered into subsequent to the coming into effect of the legislation will be included in the first set of credit reports. We are not going back to 2008 or 2006,” she added.

“Once the Credit Bureau becomes operational and the legislation is in place next year, from that date on any loan agreements that have been taken out will be a part of the Credit Bureau. The only exception to this, however, is outstanding judgments. These will continue to have an impact on one’s credit rating for as long as they are unsettled.”

The Central Bank governor said the establishment of a Credit Bureau would provide benefits to borrowers and lenders.

“In the case of the borrower, the Credit Bureau really encourages them to improve their credit and payment behaviour. To the consumer, who is unwilling to practice self-constraint, they are protected from the problem of overindebtedness, and that same consumer can be rewarded through lower collateral requirements and interest rates,” said Mrs Craigg.

She added that experience in other jurisdictions showed that Credit Bureaus needed a minimum of 250,000 inquiries annually to be sustainable.

As a consequence, information on Bahamian borrowers’ creditworthiness will be compiled, and stored, by a foreign provider outside this nation.

“We are finalising the request for solution to receive proposals from potential service providers, and we expect to issue those documents before the end of this month,” Mrs Craigg said.

It is anticipated that the Credit Bureau will issue its first reportd in early 2017.

Mrs Craigg said consumers will be provided with one free credit report annually, and in instances where there is a correction made to a consumer’s information, or where a consumer has been denied credit based on information in the report.

She added that credit reports produced by the bureau would include both positive and negative consumer information, unlike other jurisdictions where only negative information is provided.