MANILA – 03 April 2019 – The Securities and Exchange Commission (SEC), spearheaded by Chairman Emilio B. Aquino, organized a four-day forum among the financing and lending companies promoting to discuss the existing requirement for compliance to Republic Act No. 9510 also known as the Credit Information System Act (CISA). Supported by SEC Memorandum Circular No. 3 of 2016, which requires financing and lending companies to submit the basic credit data of all their borrowers to the Credit Information Corporation (CIC). The forum promoted the use of CIC’s substantial and fast-growing database of credit information to improve the speed, security, and profitability of their business while complying with the law.
SEC Commissioner, Kelvin Lee also showed support in delivering his welcome remarks and expounding on the need to comply with CISA. Atty. Rachel Esther J. Gumtang – Remalante, OIC of the Corporate Governance and Finance Department, also from the SEC, led the preparation and organization of the event.
The CIC is the country’s one and only public credit registry with seven million data subjects and close to thirty million contracts in its database. The demographics portion of the data enable rapid and accurate Know Your Client (KYC) and identity confirmation while the transactional portions, which records positive and negative payment behaviors, provides statistical data that can improve the granting of credit to those new borrowers. Within the next eighteen months, the CIC expects to onboard Microfinance and GOCC data which will make the data more robust and representative of the greater population with access to credit. However, access to CIC’s database is based on the principle of reciprocity.
Attended by 211 financing and lending companies, and 254 individuals, CIC Senior Vice President for Business Development and Communications Group Atty. Aileen L. Amor-Bautista discussed the legal and regulatory framework of the CIC. She relayed the essence of the existence of a public credit registry as a tool in improving financial inclusion and access to credit. PCEO Jaime Casto Jose P. Garchitorena mentioned that while accessing the CIC database is positioned as a business tool for those who are qualified to access it, submission is, in fact, mandatory. As a regulator of credit information, the CIC will come out with a list of compliant institutions that are compliant to submitting requirements, and may also post a list of entities that actually use credit data in their loan evaluation process.
This is in line with the CIC’s support to compliant Submitting Entities (SE) as well as a form of consumer protection by way of informing the borrowing public of institutions that, with credit data, they may be able to offer better credit options.
As part of the orientation on data-driven lending, two of the accredited credit bureaus of CIC, namely, CIBI Information Inc. and CRIF Corporation, have successfully developed usage models using the CIC data, and were tapped to present their analysis on the CIC data’s usability and predictive nature. Both credit bureaus also note the upward trajectory of data collections and quality of the CIC data while emphasizing that an increased number of data contributors could only improve the predictive nature of the data. Significant talking points were case studies showing improvements in the onboarding of borrowers that have otherwise been rejected while still improving default rates by a significant amount. Other interesting features of the data were related to the ability to map areas of credit concentration, high default, areas, and other information that could be inferred by potential users of the data while maintaining a high level of compliance to data privacy principles.
To round up the presentation, the concept of individual credit scores was discussed as a critical part of data usage roadmap. The use of credit scores derived from CIC credit would lower cost of lending by reducing the mismatch between borrower expectations by allowing the data subject to map himself to an appropriate financial institution as well as prepare himself for the needed supports, lend to more and increase the market of financial institutions.
CIC stressed that the more credit data submitted to it, the more accurate and comprehensive credit reports would be.
CIC conducts regular in-house technical training as a walkthrough for all the financial institutions on how to be compliant as a submitting entity. For more information about the upcoming trainings, you may send an e-mail to events@creditinfo.gov.ph.