Saturday, February 24, 2024

Finance firm to submit consumer data to state-run credit agency

Home Credit, a Prague-based consumer finance company that helps customers avail of smartphones, appliances and other gadgets through installment, said it will share its local database with government-owned Credit Information Corporation (CIC).

Photo shows (from left) SEC chair Teresita J. Herbosa, Home Credit PH CEO Annica Witschard, and CIC president Jaime P. Garchitorena during the partnership ceremony
Photo shows (from left) SEC chair Teresita J. Herbosa, Home Credit PH CEO Annica Witschard, and CIC president Jaime P. Garchitorena during the partnership ceremony

The data sharing, which will happen in stages, is in compliance to Republic Act 9510, which requires banks, finance companies, and other credit facilities such as utility companies to submit data related to their clients? credit history to the CIC.

Home Credit Philippines (HCPH) said it is one of the first companies to comply with the law.

In a ceremony held at the CIC office in Makati, Securities and Exchange Commission (SEC) chair Teresita J. Herbosa, who also serves as CIC ex-officio chairperson, underscored the key role that non-bank institutions such as Home Credit play in promoting greater financial inclusion in the country.

?We?re pioneers in the field of credit registry, and Home Credit is a pioneer in terms of the financing business in PH, especially considering the demographics of their borrowers. Many of them are younger people, and these are the ones who we expect will be full-fledged users of our system,? Herbosa added.

Credit Information Corporation (CIC) president and CEO Jaime P. Garchitorena remarked that ?Home Credit has a lot to do with the confidence that we have in moving the CIC forward, [since they were] one of the first organizations to engage with us.

?They have played a huge role in providing alternative methods for giving credit, which gives opportunities to people who are not yet included in the system,? he said.

For its part, HCPH CEO Annica Witschard said that ?in every country that Home Credit is in, we firmly believe in the importance of having a system in place to promote financial inclusion, and ensure that more and more people are given access to financial tools.?

?CIC?s work in creating a unified credit database will surely be beneficial for everyone, most of all ordinary Filipinos, and we hope that this can develop as quickly as possible, and that the data gathered from all of these sources is as good as possible,? Witschard added.

According to a recent survey by the Bangko Sentral ng Pilipinas, up to 86% of Filipino households do not have bank accounts, which is often a requirement for many loans.

?All too often, we?ve seen a ?vicious cycle? wherein people can?t get a loan because they don?t have a credit score, and they can?t get a credit score because they have never been approved for a loan,? Garchitorena said.

?Non-bank financial institutions can break this cycle, because they can provide credit opportunities for first-time and thin file borrowers, opportunities that might not be available from other bank based lenders. This opens the door to establish a larger credit footprint which in turn is important for a credit score,? he added.

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