By Fay Simmons
Tribune Business Reporter
A Central Bank official has placed Bahamians "on notice" that they will no longer be able to "conceal" existing loan facilities or debt delinquencies when applying to lenders for new credit.
Karranda Smith, lead supervisor in its bank supervision department, said The Bahamas' first-ever credit bureau will ultimately make lending institutions aware of all outstanding debts owed by potential borrowers - including those they fail to voluntarily disclose or reveal.
Addressing the Bahamas Institute of Financial Services (BIFS) seminars, Ms Smith said: “In any event, and in time, the credit bureau will ensure that lending institutions are apprised of all the debt obligations of a potential borrower via the credit report, despite any of the efforts of the borrower to conceal this information.
"So, you're put on notice. The credit information providers would be the banks, the credit unions, the money transmission businesses, hire purchase companies, utility companies and insurance companies.” Ms Smith explained that the data collected from these entities is used to generate a credit report, which can be accessed by a consumer, credit information provider (CIP) or a permitted party.
A free credit report is available to all Bahamians over 18, while a fee of $13 is charged for a credit score. Ms Smith said: “The information gathered is transformed into a factual and usable credit report, and sold to lenders and consumers alike. The credit reports are then used by credit monitors and other approved users to assess an individual's or a company's creditworthiness for loans, mortgages and a variety of other uses within the purview of the Credit Reporting Act 2018.
“A consumer can access a credit report, a CIP can access a credit report, a user with the consent of the data subject can access the credit report. So, every Bahamian over the age of 18 is entitled to receive a free copy of your credit report each calendar year. Their free report, however, does not include a credit score. If you want your credit score included in the credit report, you have to pay a fee of $13.”
Ms Smith said a number of institutions are either actively participating with the credit bureau, with more expected to join to provide a comprehensive credit reporting system.
She added: “The initiative is currently ongoing with, as at February 28, 2023, 24 institutions actively participating in the initiative; 26 institutions with signed contracts; 11 institutions in the testing phase; 15 institutions submitting live data or during the production phase; 11 institutions pulling credit reports; and one institution in the testing phase for actually pulling the credit reports or accessing credit reports.
“It is expected that the utility companies, the insurance companies that provide credit and that are not yet contributing data to the credit bureau, and other hire purchase companies.... it's expected that they will participate in the credit bureau initiative in due course. And this will, of course, result in a more fulsome and more comprehensive credit reporting system. Information on how you're paying your bills will be contributed to the credit bureau and will form a part of the credit reports”
Ms Smith said credit information providers must ensure data is recent and accurate, and that credit reports can be used for employment screening, tenancy arrangements and obtaining or signing as a guarantor on loans.
She said: “So CIPS are responsible for ensuring that they contribute accurate information to the credit bureau. They have to ensure that all of the data subject information submitted is up to date. They need to ensure that they're using the credit reports for permissible purposes. And one of the purposes that users use or r•eports for is for pre-employment checks, for example.”
“And if you're a landlord, you would want to use that report whenever someone is entering into a tenancy agreement or lease agreement, or when someone is renewing a tenancy agreement. And of course, the banks would use that information when they're considering applications for credit or persons who want to serve as guarantor on the applications that are made for credit.”
Ms Smith also explained that credit information providers are responsible for correcting information and notifying denial of credit due to the credit report within five working days. She said: “The CIPS are also responsible for securing information obtained from the credit bureau, and for instructing the credit bureau within five working days upon discovery to delete inaccurate information and replace it with accurate information.
“They're also responsible for notifying the data subject of the denial of credit, where the credit is denied based on the negative information that's contained within the credit report. And they're responsible for informing within the same five days, informing the data subject of the name and address of the creditor that provided the information.
“In terms of disputes, there is a dispute process in which the credit bureau is permitted 15 days after receiving a notice of dispute from the data subject to conduct an investigation and to take remedial action relative to the accuracy of the data subject’s information, which is contained in the credit report.”