SLOVAK banks have been relying on a consumer credit register for just six months. Already they agree that it has made their job easier.
Banks use a consumer credit register to access data about a loan applicant's credit history. Based on the information found in the register, a bank can determine the amount of risk an applicant poses. Risky clients - those with many outstanding debts relative to paid ones or no credit history - will likely receive higher interest rates. On the other hand, disciplined clients will likely get better terms.
The consumer credit register does not divulge private information. Banks are unable to see data specifying loan type and amount. The register simply shows the number of outstanding and paid debts. (Data remains on file for as long as debts are outstanding, and five years after debts are paid.)
The three biggest banks in Slovakia, Tatra banka, Slovenská sporiteľňa, and VÚB, started using a credit register for risk assessment in its retail sector in October of 2004. The launch of the register put the Slovak bank market closer to the developed countries in the EU as well as the US, where a credit register has a long history.
According to all three banks, the introduction of the consumer credit register has already decreased the volume of bad loans. They believe that the importance of the register will rise.
"Several times in the process of granting loans the credit register revealed information that an applicant had withheld - about loans at a different bank or the fact that several loans had been paid late," Eva Güttlerová, the spokeswoman of Slovenská sporiteľňa, told The Slovak Spectator.
She added: "The register's impact will grow as the number of banks joining the register increase."
Currently, the register contains information on approximately 900,000 people. In addition to the three banks, 12 more financial organizations have decided to implement the register.
Roman Začka, director of the public relations department at Tatra banka, also pointed out that the credit register revealed information that its clients had decided to withhold.
"On the other hand, we can be absolutely certain about the stable financial discipline in a majority of our clients. In such cases, the process of approving a loan is much simpler and faster," Začka said.
According to Táňa Hambálková, a spokesperson with VÚB bank, the credit register is an important source of information in the process of granting loans that gives a complete picture of a client's credit history.
"Thanks to the credit register, we are able to better manage bank risks. It gives us all the information we need, enabling us to better judge our clients' credit trustworthiness," she said.
Hambálková admitted that a client with a poor credit record would likely suffer the consequences when obtaining a new loan. Banks like to focus on the positive, however. They agree that the credit register allows them to be more generous to clients that thoroughly fulfil their monetary obligations.
Hambálková from VÚB said: "Taking positive records in the register into consideration gives clients advantages. It's part of the standard loan approval process now."
Tatra banka's Začka told The Slovak Spectator: "Thanks to the register, we have simplified the process of granting consumer credits. We do not need a confirmation of an existing client's income. If an applicant is not our client, such confirmation is the only document we now need to offer him a consumer loan."
A bank is able to input client records into the credit register only upon agreement. A majority of clients realize the potential advantages from being on the list.
"Only very high-risk clients refused to have us put their data in the register," Güttlerová from Slovenská sporiteľňa said.
The Slovak Banking Credit Bureau (SBCB) is based heavily on the Czech Credit Bureau (CCB) system, currently operating in the Czech Republic, and uses the same technology and information exchange systems. CCB won the tender contract in June 2003 to establish a model in Slovakia. The SBCB is responsible for data safety and the prevention of information leaks.
Slovakia was the last country of the Visegrad 4 to establish a retail credit register. The National Bank of Slovakia welcomes the initiative. In a previous interview, the spokesperson of Slovakia's national bank, Igor Barát, said that the register is an important advance on the already existing Register of Bank Loans and Guarantees, founded in 1997, which records the loan history of corporate clients, and which is operated by the national bank.
