Credit Reports: Your Questions Answered

Credit Reports: Your Questions Answered

Authors):

Central Bank of Barbados

What is a credit report?

Your credit report includes a history of your credit and repayment patterns. To prepare this report, a credit bureau collects this information from any financial institution from which you have taken out a loan, or from any entity that sells items on credit or credit. Your credit score measures your ability to meet your financial obligations to an entity that has offered you items on credit and/or hire-purchase.

Why is the credit report introduced?

Credit reports have existed in Barbados for many years. What the new Fair Credit Reporting Act will do is regulate and expand this activity.

Who is my credit information collected from?

Your information will be collected from financial institutions that offer credit, such as commercial banks, finance and trust companies, credit unions, and insurance companies.

It can also be collected from utility companies, companies that offer hire-purchase and other entities such as the Student Revolving Loan Scheme.

A more detailed list can be found in the law.

What information will be collected about me?

• A credit reporting agency may collect a wide range of information about you:

• Personal information (eg name, date of birth, address)

• The type and amount of any loan or similar type of credit, including hire purchase, that you have with a financial institution or other entity

• All your outstanding loans as well as potential liabilities, e.g. ongoing lawsuits

• The date you took out loans and the terms of those loans, such as principal, interest rates and repayment schedule

• Information about assets you use as collateral for a loan or other type of credit

• The current and maximum balance of your loan

• The status of any outstanding loans you have, including the last time you made a payment on them

• Any collateral you have agreed to provide (i.e. if you are acting as a guarantor for someone else’s loan)

Do I need to authorize the collection and sharing of my information?

In some cases, you may be asked to give your consent. However, in other cases, your consent is included in the terms of the credit agreement you enter into with the credit information provider (e.g. financial institution, utility company, business) .

The Company may also notify you that your information will be shared by posting a physical notice on its premises or by posting a notice on its website. In such cases, doing business with the entity in question after notification constitutes consent.

Do I need to authorize a company to access my credit information?

Yes. However, a company or other entity may determine that your consent to access your information is a condition of offering you credit.

With whom will my information be shared?

Anyone using the services of the credit bureau may receive your credit report, credit score, or other credit information about you.

This includes banks, credit unions, and other financial institutions, as well as companies that offer hire-purchase, potential landlords, and potential employers, if the position involves significant financial responsibilities.

Will I be notified when someone accesses my credit information?

No, you will not be notified when someone accesses your information. Remember, however, that entities cannot access your information without your consent.

What happens if I do not consent to my information being collected or shared?

If you do not consent to your credit information being collected or shared with an entity, that entity has the right not to enter into an agreement with you.

Can I access my credit report?

Yes. Each year, you are entitled to a free copy of your credit file upon request.

What if something on my credit report is inaccurate?

If the credit bureau information about you is incorrect, you can send a letter requesting that the error be corrected. The credit bureau must, within seven days of receiving your letter:

• Investigate your complaint and make the necessary corrections

• Inform you that you can report the dispute to the Central Bank of Barbados

How can I be sure that the information collected about me will be secure and not misused?

The credit bureau and all credit information providers must have appropriate systems, policies, and procedures in place to protect your information from accidental loss, destruction, or damage. Any malicious violation of your data privacy is subject to a BDS$50,000 fine.

How will a bad report hurt my credit outlook?

A company might refuse to give you a loan if they consider you to be at risk of bad credit.

Will having a good credit rating increase my chances of getting a loan or other type of credit?

Companies and other entities can determine who they do business with or not, but it is natural to prefer doing business with customers who have a good track record of meeting their obligations, as these customers are considered low risk.

How can I get a good credit score?

The best way to boost your credit score is to seek to meet your credit obligations as agreed and speak to your credit provider promptly if you are having difficulty.

What counts as bad credit? If my bills are due in the middle of the month, but I pay at the end of the same month after payday, does this affect my credit score?

The Fair Credit Reporting Act does not identify specific factors that contribute to your credit score. So different credit bureaus will determine what activities they take into account when determining what is considered bad credit and how much they weight them.

Will different issues be weighted differently? Will paying an invoice late count as not paying an invoice?

Different credit bureaus will use different metrics and apply different weightings to assess your creditworthiness.

How would something like moratoriums during COVID count in terms of my perceived creditworthiness?

Since the moratoriums during the COVID-19 pandemic have been offered by financial institutions, it is unlikely that someone who agreed to the moratoria will see the related non-payments reflected in their credit rating.

How long will it take for bad credit to clear my report?

According to the Fair Credit Reporting Act, credit bureaus can keep information about your credit activity for seven years after you pay off the loan or other debt.

How often will my credit file be updated?

The credit report is an ongoing activity, so each time you enter into a new credit agreement or pay off an existing loan, it will be reflected in your credit report.

Is everyone starting from zero when the law comes into force?

Although the Fair Credit Reporting Act was only recently passed, credit bureaus have been operating in Barbados for several years. It is therefore likely that these bureaus and others will use the credit information currently available about you and rely on it in the future.

Can I be denied a loan, hire purchase, or access to a utility if my credit is bad?

Yes. Companies and other entities can determine who they want to do business with and can choose not to do so with someone they consider a credit risk.

Can a business change the terms and conditions of an existing loan or agreement based on a credit report?

This is unlikely as the terms and conditions of existing agreements would already be defined. Your credit report may, however, affect any future agreements you may enter into with the same or another company.