Credit re­port­ing the new norm

Jamaica Gleaner - - FEATURE - Shena Stubbs Con­trib­u­tor Shena Stubbs is an at­tor­ney-at-law and le­gal com­men­ta­tor. Send feed­back to: Email: shena.stubbs@glean­erjm.com; Twit­ter:@shenas­tubbs

UP TO five years ago, I would lis­ten to my fam­ily mem­bers and as­so­ci­ates in North Amer­ica la­ment about how im­por­tant their hav­ing a healthy credit score was to the qual­ity of their liveli­hood and feel se­cretly re­lieved that this was not an is­sue in Ja­maica. Six years af­ter the pas­sage of the Credit Re­port­ing Act (the act) in Ja­maica, how­ever, this is no longer a tru­ism. Hav­ing a good credit score is now an in­escapable pre­req­ui­site to ac­cess­ing credit in Ja­maica.

AC­CESS TO CREDIT

For some time now, Ja­maicans ap­ply­ing for loans from the ma­jor com­mer­cial banks, in­clud­ing NCB, BNS and FGB, have had their credit score checked as a pre­con­di­tion to them ob­tain­ing the loans sought. The same is true for ob­tain­ing a mort­gage at build­ing so­ci­eties, in­clud­ing VMBS and Sco­tia Ja­maica Build­ing So­ci­ety. I have per­son­ally done busi­ness in the past two years or so with the fi­nan­cial in­sti­tu­tions named in this para­graph and so can re­fer to them based on my own per­sonal ex­pe­ri­ence; how­ever, based on the in­for­ma­tion of clients and as­so­ci­ates, the prac­tice is now per­va­sive and ex­tends far be­yond the afore­men­tioned fi­nan­cial in­sti­tu­tions.

DE­NIAL OF CREDIT

Some fi­nan­cial in­sti­tu­tions in Ja­maica are now adopt­ing a very strict ap­proach to credit scores and will deny a credit fa­cil­ity once an ap­pli­cant’s credit re­port is not sat­is­fac­tory. Oth­ers are, how­ever, more flex­i­ble and will use the re­port as one fac­tor only, in an over­all as­sess­ment of the loan ap­pli­cant.

In one case I heard of from a bank­ing loan of­fi­cer, a cou­ple ap­proached the bank in ques­tion to ac­cess a credit fa­cil­ity us­ing the se­cu­rity of their jointly held home. When their credit re­ports were ac­cessed, the wife’s re­port was sat­is­fac­tory; how­ever, the hus­band’s re­port showed that he had de­faulted on a credit card fa­cil­ity some years ago while he was a stu­dent. This fi­nan­cial in­sti­tu­tion had a very strict pol­icy re­gard­ing credit re­ports, and al­though the de­fault had happened many years be­fore, the loan was de­nied.

In an­other sce­nario, a loan was de­nied to a cou­ple, again, be­cause the hus­band had a blem­ish in his credit re­port. What is in­ter­est­ing about this case was that the fi­nan­cial in­sti­tu­tion which turned the cou­ple down had done busi­ness with them on di­verse oc­ca­sions in the past and had been re­paid early each time. In fact, the cou­ple of­ten re­ceived pre-ap­proved loan of­fers through the mail from the same in­sti­tu­tion be­cause of their early pay­ment record. How­ever, when the cou­ple ap­proached the fi­nan­cial in­sti­tu­tion for a loan in 2015, as they had pre­vi­ously done in the past, the ap­pli­ca­tion was de­nied be­cause the vet­ting sys­tem now re­quired that their credit re­ports be pulled. When their re­ports were pulled, it re­vealed that the hus­band had been re­ported by an­other com­pet­ing fi­nan­cial in­sti­tu­tion for tak­ing long to set­tle a credit card debt sev­eral years be­fore. Al­though the hus­band ex­plained that the de­lay in set­tling the credit card debt had been through in­ad­ver­tence, and al­though the credit card debt had been set­tled fully for some time, by the time the cou­ple was seek­ing this new loan, the in­for­ma­tion was still on the hus­band’s credit re­port and the loan fa­cil­ity was not granted.

In yet an­other case shared with the writer, a lady was de­nied a mort­gage be­cause she had guar­an­teed a loan for some­one and that per­son had de­faulted. Al­though the lady had been re­pay­ing the loan in ques­tion, when she ap­plied for the mort­gage, her credit re­port, when pulled, re­vealed that her re­pay­ment pat­tern had not been con­sis­tent. The mort­gage fa­cil­ity was, there­fore, de­nied and the lady had to can­cel the agree­ment she had en­tered into to pur­chase a house.

CREDIT BU­REAUS

There are two credit bu­reaus in Ja­maica, both of which are re­lied on by the ma­jor fi­nan­cial in­sti­tu­tions when pro­cess­ing loan ap­pli­ca­tions. They are: Credit Info, lo­cated on the Tow­ers, Do­minica Drive; and CRIF NM Credit As­sure Lim­ited, lo­cated in the Winch­ester Busi­ness Cen­tre. The two bu­reaus com­pile data sent to them by fi­nan­cial in­sti­tu­tions go­ing back years and use that in­for­ma­tion to gen­er­ate a credit re­port and score for each per­son whose name ap­pears in their data­base.

FREE CREDIT RE­PORT

Un­der the act, each cit­i­zen of Ja­maica is en­ti­tled to one free credit re­port each year. There­after, a sub­se­quent copy of the re­port in the same year will have to be paid for. It is very im­por­tant that we all take ad­van­tage of the op­por­tu­nity to ob­tain the one free credit re­port to which we are en­ti­tled each year, as from my own per­sonal knowl­edge, the in­for­ma­tion in the re­ports is some­times in­cor­rect and may need to be chal­lenged.

For­tu­nately, the process of chal­leng­ing the re­port is not dif­fi­cult. Both bu­reaus have sys­tems in place to record queries/dis­putes, and fol­low up with the fi­nan­cial in­sti­tu­tions which sub­mit­ted the orig­i­nal in­for­ma­tion for re­sponses. If af­ter con­sult­ing with the fi­nan­cial in­sti­tu­tion which pro­vided the orig­i­nal in­for­ma­tion the bureau is sat­is­fied that the chal­lenge had merit, the of­fend­ing credit re­port will be up­dated. The dif­fi­culty, how­ever, is that the pe­riod of time be­tween the query/chal­lenge be­ing lodged and the re­port be­ing up­dated can en­com­pass weeks, which may be crit­i­cal time lost when one is try­ing to ac­cess a par­tic­u­lar loan fa­cil­ity quickly.

BE ALERT

With credit re­port­ing now an im­por­tant part of the tapestry of Ja­maican life, it is im­por­tant that read­ers be alert about their credit in­for­ma­tion. I re­cently found out that a credit card pay­ment I had made had been in­ad­ver­tently ap­plied to an­other per­son’s ac­count with a sim­i­lar name. Be­fore this credit re­port­ing clime, given that the funds were even­tu­ally cred­ited to my ac­count, I would have dropped the is­sue. How­ever, given the new dis­pen­sa­tion we are now liv­ing in, it be­came very im­por­tant to me to be as­sured by the bank that the doc­u­men­ta­tion it had gen­er­ated with re­spect to the par­tic­u­lar pay­ment (which they share with the credit bu­reaus) would be rec­ti­fied to show that the pay­ment in ques­tion was, in fact, made two weeks be­fore the er­ror was picked up and, there­fore, was NOT LATE. We must bear in mind that it is not only the ab­sence of pay­ments which con­trib­ute to poor credit re­ports, late pay­ments also do that.

I strongly en­cour­age any adult who has never re­ceived a credit re­port to call up the lo­cal credit bu­reaus on Monday and ar­range to get a free copy. Once re­ceived, re­view your re­port care­fully. If you do not un­der­stand it, seek guid­ance from the folks at the bureau, but do not leave it there ei­ther. You should also take the re­port to your favourite fi­nan­cial in­sti­tu­tion and have a cus­tomer ser­vice rep­re­sen­ta­tive go through it with you. Ask him/her to ad­vise you, espe­cially on ar­eas that may pre­vent you ac­cess­ing credit in the future. Happy hunt­ing!

I strongly en­cour­age any adult who has never re­ceived a credit re­port to call up the lo­cal credit bu­reaus and ar­range to get a free copy. Once re­ceived, re­view your re­port care­fully.

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