Development of Credit Reporting Around the World
A comprehensive overview of credit registries
This presentation discusses the following issues:
- Importance of credit reporting and how it affects credit markets;
- Differences between public and private credit registries;
- Privacy and credit information sharing: the key elements of an effective legal and regulatory framework.
The presentation describes:
- Usefulness of credit information registries in decreasing information asymmetries, the accurate evaluation of risk, and in the increase of credit volume;
- Way in which credit information sharing expands lending by:
- Reducing financing constraints for firms,
- Making banks more efficient, helping them to save time and costs, and reducing default rates;
- European Union countries that have Public Credit Registries (PCRs);
- Presence of private credit reporting systems in the United States, Canada, the United Kingdom, and Nordic countries;
- Sources that submit information to public and private registries;
- Emerging elements of good practice for PCRs;
- Role of governments in establishing or strengthening credit reporting;
- Laws and regulations that create an enabling environment;
- World Bank Credit Reporting Systems project.
The presentation concludes that:
- Credit reports reduce the time and cost of providing credit;
- Public and private credit registries can complement one another.
It recommends that:
- Credit histories should be complete and the data should be available to an open user group;
- Regulatory framework should ensure consumer protection;
- Consumers should be educated about their rights.