MAKATI CITY, 4 October 2019 – As a way of introducing the large-scale use of Credit Reports to financial institutions (FIs), the Securities and Exchange Commission (SEC) En Banc, on 27 September 2019, granted the request of Credit Information Corporation (CIC) for an introductory price of P10 until 31 March 2020.
The P10 per Credit Report introductory price for FIs is inclusive of VAT.
Lenders or CIC’s Submitting Entities (SEs) — credit card issuers, universal and commercial banks, thrift banks, rural banks, cooperatives and cooperative banks, savings and loan associations, private lending institutions, private leasing and financing companies, microfinance institutions (MFIs), government-owned and controlled corporations (GOCC), and insurance companies — may access basic credit data from the Corporation provided they meet the minimum standards of compliance by having at least six (6) months’ continuous submission, and by completing all necessary documentation including the execution of the Memorandum of Agreement (MOA), all of which establish a commitment to pay for the services derived from the CIC.
Under the law, access to the CIC data is not mandatory and is subject to the terms and conditions as specified by the Corporation. Should a submitting institution fall out of compliance, the Corporation will suspend its access.
Lowering investment risks
“The Philippines may be considered a mature market when it comes to assessing borrowers; however, it may also be considered immature when it comes to using comprehensive credit data of borrowers in the lending and risk management process. This is the very reason why the CIC was created by law in 2008,” CIC President and CEO Jaime Casto Jose P. Garchitorena shared.
Asked about the CIC’s value proposition, Garchitorena said, “Even at the full price of P55, with our comprehensive gathering of credit information from the full range of lenders — from commercial banks to MFIs and coops — we believe that our product is worth the money. The ten-peso introductory price for FIs is a way to lower any investment risk in using the CIC data, which some information users may consider a new entrant into the credit information delivery business.”
The CIC now has close to nine million unique borrowers in its data base and over 45 million contracts making it arguably the largest gathering of credit data in the Philippines.
Benefitting MSMEs, new-to-credit individuals
Garchitorena also explained how having so much data can improve credit access to new-to-credit individuals and micro, small, and medium enterprises (MSMEs).
“The general notion is that if you have no previous credit, then you are an unacceptable risk. With large amounts of data from the CIC, the Corporation’s accredited Credit Bureaus can help lenders develop lending and risk management model from a statistical perspective,” the PCEO added.
“People with previous credit exposures can get credit scores using their credit histories. People with no credit history, meanwhile, can be compared to a statistically significant group of individuals with similar traits and characteristics. This removes the binary nature of credit history versus no credit history. With the CIC data, even individuals with no actual credit history can have some type of data-driven basis for being assessed for creditworthiness,” he explained, stressing that this is a significant step for people who are unbanked or have unrecorded exposures from dealing with other sources of credit.
Challenges, ways forward
The CIC Credit Report contains consolidated positive and negative credit data and other relevant information including detailed financial contracts and credit card(s) records. These are already available online to qualified FIs.
Online reports and scores — which shall soon be available for individuals through CIC’s Accredited Bureaus — will not only help the CIC comply with the anti-red tape act (ARTA) requirements, but will also allow it to deliver its services to a larger number of Filipinos anywhere in the country.
Garchitorena likewise cited that the biggest challenge for the CIC is online security and a robust know-your-client (KYC) process: “Establishing a firm security regime is one big part of being online, that the CIC will not rush despite our desire to accelerate availability of our services.”
The CIC PCEO further encouraged all SEs to get onboard to access data and take advantage of the introductory price: “In the end, the goal of the CIC is to enable lenders to lend more to the latter’s existing clients, open up the market to those new to credit, and allow more transparency between the borrowers and lenders to avoid risky lending and over-indebtedness.”
The country’s sole public credit registry started rolling-out paid access phase since July of 2019, thus making aggregated credit data available to data contributors.
Beginning 1 April 2020, the commercial value of the CIC Credit Report for FIs shall already be set to P55.