The credit bureau is a collection agency that collects account information from various creditors and provides that information to consumer reporting agencies in the United States, a credit reference agency in the United Kingdom Raya, a credit reporting agency in Australia, a credit information company (CIC) in India, Special Accessory in the Philippines, as well as to private lenders. This is not the same as credit rating agencies.
Video Credit bureau
Description
The Consumer Reporting Agency is an organization that provides information about individual loans and the habit of paying bills. Credit information such as a person's previous loan performance is a powerful tool for predicting his future behavior. Such credit information agencies reduce the effect of asymmetric information between borrowers and lenders, and alleviate the problem of adverse selection and moral hazard. For example, sufficient credit information can facilitate lenders in screening and monitoring of borrowers and avoid lending to high-risk individuals. It helps lenders assess creditworthiness, ability to repay loans, and can affect the interest rate and other terms of the loan. Interest rates are not the same for everyone, but can be based on risk-based pricing, a form of price discrimination based on the various risks expected of different borrowers, as stated in their credit ratings. Consumers with a poor credit payment history or court deciding debt obligations such as tax lien or bankruptcy will pay higher annual interest rates than consumers who do not have these factors. In addition, decision-makers in areas not related to consumer credit, including job screening and assurance of property and accident insurance, are increasingly dependent on credit records, as research has shown that such records have predictive value. At the same time, consumers also benefit from a good credit information system because it reduces the credit monopoly effect of banks and provides incentives for borrowers to repay loans on time.
In the US, consumer reporting agencies collect and collect personal information, financial data, and alternative data on individuals from multiple sources called data providers used reporting agencies to establish relationships. Data installers are usually creditors, lenders, utilities, debt collection agencies (credit bureaus) and courts (ie public records) that consumers have a relationship or experience with. Data creators report their payment experiences with consumers to credit reporting agencies. The data provided by the provider and also collected by the bureau is then collected into the repositories or data files of consumer reporting agencies. The resulting information is available on request to customers from consumers' reporting agencies for purposes of credit risk assessment, credit ratings or for other purposes such as work consideration or apartment leasing. Given the large number of consumer borrowers, these credit scores tend to be mechanistic. To simplify the analytical process for their customers, different consumer reporting agencies can apply mathematical algorithms to provide scores that customers can use to more quickly assess the likelihood that someone will repay certain debt given the frequency that other people in the same situation have failed. Most consumer welfare advisers advise individuals to review their credit report at least once a year to ensure they are accurate.
In addition to providing credit information, this service has become a source of authoritative identity information that can be verified by people using identity verification and knowledge-based authentication services.
Maps Credit bureau
India
The establishment of Credit Information Bureau (India) Limited (CIBIL), India's First Credit Bureau of Credit, is an effort made by the Government of India and Reserve Bank of India to improve the functioning and stability of India's financial system by containing asset (NPAs) while improving the quality of the creditor's portfolio credit.
CIBIL is promoted by State Bank of India (SBI), Housing Development Finance Corporation (HDFC), Dun & amp; Bradstreet Information Services India Private Limited (D & B) and TransUnion International Inc. (TransUnion) to provide comprehensive credit information by collecting, collating and disseminating credit information relating to commercial and consumer borrowers, to closed user groups.
With two other major credit bureaus coming to India in 2010 (Equifax and Experian), the Credit Environment is changing very fast and the importance of credit ratings is felt across the country.
Around the same time, RBI also granted an operating license to the High Mark Information Credit Service - the only beginning in this oligopoly. High Mark launched its first microfinance bureau in India in early 2011 & amp; today operates the world's largest microfinance bureau in addition to offering traditional bureau services to the Retail lending industry.
Pakistan
ECIB ECIB is software to monitor credit reports across Pakistan. State Bank of Pakistan monitors Software and all Financial Institutions in Pakistan must install this software. The monthly process updates the report at the end of Bank Negara.
Membership with CIB, as instructed by the SBP, is required for all Banks, Development Finance Institutions (DFIs) and Micro Finance Banks (MFBs) respectively. No financial institution can access CIB database without obtaining CIB membership from Bank Negara Pakistan.
All member financial institutions are required to submit all online borrower records to CIB each month. This information is submitted within two weeks from the closing date of the month.
History
The Electronic Credit Information Bureau (CIB) was established by State Bank of Pakistan (SBP) in December 1992. CIB's scope and activities are governed under the terms of the Banking Companies Ordinance (BCO), 1962. Section 25 (A) supports the powers by the SBP to request credit information in a manner that is deemed necessary and provide such information to any banking company.
United Kingdom
Credit Reference Agent
In the UK, three credit reference agencies are Experian, Equifax, and Callcredit, which work closely with US partners, TransUnion.
Most banks and other lending organizations subscribe to one or more of these organizations to ensure the quality of their loans. This includes companies that sell goods or services on credit such as credit card issuers, utility companies and card issuers. The subscribed organization is expected to provide relevant data to maintain a common data set.
The credit reference agency is bound by the Data Protection Act of 1998, which requires that identifiable individuals related data be accurate, relevant, held for the right purpose and not expired. Individuals have the legal right to access data stored on them. This law specifically gives consumers the right to request a copy of their credit file by mail for a fee of £ 2. The UK reference credit agent will also allow consumers to access their credit report online for free for trial period, after which monthly or quarterly fees may subject to continuous access.
Consumer Credit Act (1974)
The activities of the Credit Reference Agent are governed by the Consumer Credit Act of 1974.
United States
In the United States, there is no legal term for a credit bureau under the federal Fair Credit Reporting Act (FCRA). A consumer reporting agency is often abbreviated in the industry as CRA.
In the United States, consumer protection and general reporting rules of major consumer agencies or good governing guidelines for consumer reporting agencies and data providers are the Fair Credit Reporting Act (FCRA), the Fair and Accurate Credit Transaction Act (FACTA), Fair Credit Billing Act (FCBA), and Rule B.
Two government agencies share responsibility for the monitoring of consumer reporting agencies and those who provide data to them. The Federal Trade Commission (FTC) has oversight for consumer reporting agencies. The Financial Supervisory Office of the Currency Accountant (OCC) lists, regulates, and oversees all national banks in relation to data they provide to consumer reporting agencies.
Most US consumer credit information is collected and stored by four traditional national consumer reporting agencies: Experian (formerly TRW & Service Information System and CCN Group), Equifax, TransUnion, and Innovis (purchased from First Data Corporation in 1999 by CBC Company). These organizations are nonprofit businesses and have no affiliation with the government. Although they are competitors, they are members of a trade organization called the Consumer Data Industries Association (CDIA) to set reporting standards and lobby on behalf of their industry issues in Washington. The current reporting standards accepted by the four US CRAs are Metro and Metro2. Metro2 standards are defined in the annual CDIA publication, Credit Reporting Resources Guide . Consumers are entitled to a free annual credit report from each of the three national consumer reporting agencies, Equifax, Experian, and TransUnion. Consumers can go to annualcreditreport.com, an Internet site managed by the three companies, to get their free report.
There are dozens of other companies collecting and reporting similar information that analyzes and sells information about consumers for other purposes, including those who combine multiple sources of credit data and provide lenders with special analytical tools. In addition, there are also non-traditional credit reporting agencies.
PRBC (Payment Reporting Builds Credit, Inc.) is a national alternative credit bureau. Founded in March 2002, PRBC allows consumers to register and build positive credit files by reporting on-time payments (such as leases, utilities, wires and phones) that are not automatically reported to the three traditional credit bureaus.
In the US, there are six repositories of business or commercial bureaus (in alphabetical order): Cortera, Dun & amp; Bradstreet, Experian Business, Equifax Commercial, PayNet, and Southeastern Association of Credit Management (SACM). Although not a credit reporting agency, Small Business Financial Exchange, Inc. (SBFE) is not for profit trading associations for small business lenders of all types of industries. SBFE collects and protects small business payment data for Members to help build a true and accurate picture of the small business and then facilitates the exchange of that data to a particular business credit reporting agency that has a SBFE Certified Vendor license agreement. SBFE only permits business credit reporting agencies to license Member data for risk management purposes, the use of data marketing is not authorized by SBFE.
Liability Tort for business defamation
In case of Dun & amp; Bradstreet, Inc. v. Greenmoss Builders, Inc. 472 US 749 (1985), the US Supreme Court declared that consumer reporting agencies could be liable if careless in reporting the impending or future bankruptcy filing of the business was not a public figure.
Iran
Iran Credit Scoring (ICS) Company is a single licensed national consumer reporting agency that offers credit information services to each of its members in Iran. ICS is a private equity firm established in 2006 by all Iranian banks (private and public banks) and other financial institutions such as leasing and insurance companies operating in the Islamic Republic of Iran in the context of current banking actions and regulations issued by the Ministry of Affairs Economics and Finance of Iran and the Central Bank of Iran.
The main purpose of ICS is to help credit providers make better lending decisions quickly and more objectively. To achieve this, ICS intends to collect credit-related information among the participating members to provide credit providers with a more complete risk profile of customers (individuals, unrelated entities, corporate entities or other entities).
ICS tends to collect credit-related information among the participating members to provide credit providers with a more complete risk profile from customers. Participating members disclose credit-related information to and obtain information from CRA to assess the creditworthiness of their existing and prospective customers, which enhances the credit provider's risk assessment ability to determine whether the customer will pay or not.
Philippines
In 1981, Ferdinand Marcos, who at that time President of the Republic of the Philippines, issued a Letter of Instruction no. 1107 which requires the Central Bank of the Philippines to analyze the possibility of establishing and funding the operation of credit bureaus in the Philippines as it interferes with the increased failure of corporate borrowers.
In compliance with orders, the Central Bank of the Philippines organizes a Credit Information Exchange System under the Loans and Credit department. It was created to engage in preparing, developing and analyzing credit information on individuals, institutions, business entities and other business issues. It aims to develop and exchange sustainable credit data in its members and customers and to provide impartial source of credit information for debtors, creditors and the public. It will also work together and guide government agencies in their credit information requirements.
On April 14, 1982, Credit Information Bureau, Inc. established as a non-profit and non-profit company. (See: Presidential Decree No. 1941 [7])
In 1982, Credit Information Bureau, Inc. was established through the power of Presidential Decree 1941 and made under the Central Bank of the Philippines, now the Bangko Sentral ng Pilipinas (BSP) of the Loan and Credit department, the Securities and Exchange Commission (SEC) and the Philippine Financial Executive Institute (FINEX); to start a credit information exchange system in the country.
In 1997, Credit Information Bureau, Inc. established and converted into a private entity and became CIBI, Inc. Information
In 2008, the Republic Act no. 9510 also known as the Credit Information System Act of 2008 provides the way for the creation of Corporate Credit Information as a new credit registration owned and controlled by governments in the country.
In 2011, TransUnion Information Solutions, Inc. began operations in the Philippines, in partnership with the Philippine Islands Bank (BPI), Banco de Oro Unibank (BDO), Metrobank Card Corporation, HSBC and Citibank Philippines to launch the country's first comprehensive, international private credit bureau.
Contributing TransUnion members are given access to credit information in the form of credit reports, consumer bureau scores and additional value added services. TransUnion Philippines aims to strengthen the Philippine financial system through increased access to credit for borrowers and reduce risk to lenders.
Saudi Arabia
Saudi Credit Bureau (SIMAH) is the first and only licensed credit bureau offering commercial and consumer credit information services to each member of the Kingdom of Saudi Arabia. It was established in 2002 and started operations in the field in 2004 under the supervisory umbrella of Saudi Arabia Monetary Agency (SAMA).
The idea went back to 1998 when national commercial banks and SAMA thought to set up a Saudi credit bureau offering consumer and commercial information. Meetings are held for this purpose and officials are tasked to coordinate with the World Bank to consider the international experience that exists for some countries to establish a credit bureau based on a methodological and knowledge approach to contribute to the Saudi national economy.
SIMAH was later established to operate within the context of current banking actions and regulations issued by SAMA.
Controversy
In the United States, the percentage of credit reports provided by consumer reporting agencies contains inaccuracies. According to the US General Accounting Office (GAO), the common cause of errors is broadly categorized into one of two categories: incorrect information inclusion and correct information exclusion. The reasons for inaccuracies include consumers providing inaccurate information to consumer reporting agencies; incorrect or incomplete data input by the provider, or failing to provide data to the consumer reporting agency; and incorrect or incomplete data (or data applied to the wrong consumer) by the consumer reporting agency. According to Avery, Calem, and Canner in Credit Report Accuracy and Access to Credit , "those who bear the cost of correcting mistakes or providing more timely and complete information [data providers and consumer reporting agencies] may do not receive much benefit from increased accuracy. "
The formula for calculating consumer credit scores by consumer reporting agencies is proprietary and is considered the secret of agency trade in the United States.
Some consumer reporting agencies in the United States provide two credit scores - 'education' scores to consumers and similar FICO-like scores to lenders or businesses. Liz Weston writes that some consumer supporters refer to these other [educational] credit scores as "FAKO scores" (a game with the FICO acronym). Taking into account the fact that algorithms that judge people are used discriminately to deny legal rights of people (work, insurance, credit, etc.), they strongly algorithm act as law. The law says that if someone does "this" or if someone "does" it, then they will be given different treatment and opportunities. What needs to be done though remains a secret. Therefore, people are called to obey the secret law. There are at least two things to check: First is that the operation of the more common "cold effect" that imposes an undisclosed law may have and; Secondly, the social effect of discrimination, which takes on an entirely new light in context no longer discriminates against race or age, but on the basis of numbers, the numbers that have been set for all members of the public that reflect information about that person unknown. Thus, there is no definition at this point about what information is collected by the credit repository or even whether the use of that information or what it reflects. These questions can only be answered if the algorithm is published and expert statisticians are allowed to examine them and refine the intent of the model, whose intentions are also not disclosed.
According to David Szwak, partners at Bodenheimer, Jones & amp; Szwak specializing in insurance law and litigation against consumer reporting agencies, some consumer reporting agencies in the United States maintain VIP databases from specialized consumers such as congressmen, judges, actors, and celebrities. The VIP database is specifically managed by the bureau, which ensures consumer credit reports are accurate and not handled negatively. The database exists because individuals in the VIP database can cause significant problems for the bureau, including negative publicity and legislative actions that could have an adverse impact on the industry. So far the economic model for illustrating this industry has not been tried, while its fundamentals are counter-intuitive for every known market, because other industries (finance, banking, insurance) sponsor consumer reporting agencies to process information while consumers pay CRA to receive the information.. Consumer utilities are difficult to quantify because consumers are not given a way to correct the mistakes processed about them, so the dynamics of this triangle involving consumers, credit reporters, and the sponsorship industry remain undefined.
Business Credit Reporting Agency
Commercial credit reporting and scoring bureaus also exist, and can be used to evaluate the likelihood of a creditor paying a business. Examples of commercial credit reports are Paydex scores from Dun & amp; Bradstreet, Risk Rating from Creditsafe, Experian Intelliscore, CPR Scores from Cortera, GCS scores from the Global Credit Service, and CIC Score and NACM National Trade Credit Report from the National Association of Credit Management. TransUnion, Equifax, and Rapid Ratings International are also examples of commercial credit reporting agencies.
List of credit reporting agencies
See also
- Credit history
- Credit risk
- Credit circle
References
External links
- World Bank GFDR report
- The Federal Trade Commission Government's Gazette on Free Credit Reports
- The Federal Trade Commission Administration page at FCRA and consumer rights
- OCC - Supervisory Office of Currencies
- State Bank of Pakistan FAQ on Credit Bureau
- List of UK Credit Reporting Bodies
- List of Consumer Financial Protection Bureau (CFPB) List of Consumer Reporting Agencies (CRA) as of January 2015
Source of the article : Wikipedia
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