Caribbean Credit Bureau: A Useful Tool for Businesses

Being able to assess credit worthiness is gold for lenders and businesses. One of the best ways to verify the credit worthiness of your customers is to run a credit report before selling on account or extending loans. A good credit reporting infrastructure in a community has benefits to banks, retailers and consumers.

Studies have shown that comprehensive reporting benefits the overall community by helping to prevent losses to credit issuers and protects consumers from becoming over-extended. It may also help consumers with good credit to get better interest rates. It is this kind of edge that gives your business added value as it reduces operating losses for write-offs due to bad credit issues.

Background
Caribbean Credit Bureau (CCB) has served the Curaçao market for the last 10 years, primarily focusing on the lending institutions. It was founded in 2004 and operates independently from its members. CCB also operates in Bonaire and is currently in the process to start up in other islands in the Dutch Caribbean. CCB acts as an independent platform provider between credit issuing institutions, as they can access the credit history of applicants in order to ascertain their candidacy for offering further credit. According to Niko Kluyver, Managing Director of the CCB, “The ultimate goal of the CCB is to provide an efficient, transparent and accurate data platform that is used for the right purposes.”

Who Qualifies for Membership?
There are two types of credit issuing institutions that qualify to make use of the services of CCB. First, CCB serves the lending institutions (commercial banks and other lending institutions) that extend loans to consumers. Second, companies that issue trade credit as part of the sale of goods or services they sell on account can also become members. Examples are the credit sales of electronics, household goods and telecommunication services.

Positive and Negative Registration
Positive information consists of all outstanding credits of an individual by one or more members, while negative information gives information about credits that have fallen significantly in arrears. Positive and negative information is accessible to the lending institutions, while retailers only have access to negative information. The possibility for members to have access to positive registration is being implemented and is expected to be completed early 2015.

Use of Credit Reports
In practical terms, if an individual (or the individual that is operating commercially as a proprietorship) is applying for credit at a company that is a member of CCB, their credit history will typically be checked by the member to assess eligibility before approving the credit application. Thus, the credit report assists to establish the “credit-worthiness” of an individual before agreeing to provide credit. The benefits for CCB members, such as the banks, is that they have an enhanced view of the individual that is applying for credit, thus mitigating their risks. Naturally, as part of their membership agreement, members are required to provide certain credit information about their customers to CCB in order to maximize the usefulness of the credit reports.

Protecting the individual: Privacy and transparency CCB is a closed platform. Only members of CCB have the ability to log on to the system. Also, a strictly controlled data-exchange arrangements are being considered with a limited number of professional international credit bureaus. CCB duly observes all applicable privacy laws and has appointed a data protection officer to monitor all privacy related matters. Access to the database to retrieve credit reports are monitored and is based on multi-level login requirements, such as a security code per login session. CCB itself does not have viewing rights of the data, except for running a credit report from individuals who have requested a copy of their own report. CCB has also encrypted all of the personal data it stores. This eliminates the risk of any unintended access to the data. CCB is not allowed to use the data for any purposes, such as distributing information to others.

Individuals have full disclosure of their information that is stored at CCB. They have the right to receive a copy of their credit report at any time for a small fee; one report per year is provided for free. The report includes all registered information and discloses which members have requested access to the credit record. This allows each individual full disclosure of which members have reviewed his/her credit history. Members shall only do a credit check on an individual if that individual has applied for credit at that member’s institution or as part of the ongoing monitoring of an outstanding credit with the member. Individuals also have various avenues open to them to remedy any inaccuracies in their report. Member institutions are ultimately responsible for ensuring data is accurate in the CCB system so that credit reports are correct. If members don’t maintain the information in their database, they could face additional administrative fees. It is vital to CCB that the information is accurate and fairly reflects an individual’s credit standing.

As part of its commitment to high professional standards and compliance with best practices, CCB has become a member of the Association of Consumer Credit Information Suppliers (ACCIS) based in Brussels.

Membership
Only institutions issuing credit to consumers in Curaçao can become a member of CCB in Curaçao. Members agree to a code of conduct and the general rules applicable to their membership. The member must comply with a few other criteria, such as adhering to good credit procedures and accounting.

CCB Looking ahead
Next year, after finalizing the roll-out of the positive registration for consumers, CCB will introduce credit registration for small and medium enterprises (SME’s). “We have received many requests to include SME’s as part of our service, which our systems are ready to handle,” Kluyver stated. “It has been demonstrated in many countries that the presence of a credit reporting agency for consumers and SME’s results in debt default rates going down. At the same time, it showed that credit will be granted to individuals and SME’s who could not obtain credit before, while issuing credit to over-extended individuals is better managed. That is a good thing for both business and the community.”

For more information go to www.caribbeancreditbureau.com or email them directly at management@caribbeancreditbureau.com