Credit registers dictate loan conditions

CREDIT registers collect information about the payment history and discipline of borrowers and help banks assess the creditworthiness of loan applicants. Applicants can benefit from the registers too, as those with a good credit history and discipline have increased chances of getting a loan, and at a better rate.

CREDIT registers collect information about the payment history and discipline of borrowers and help banks assess the creditworthiness of loan applicants. Applicants can benefit from the registers too, as those with a good credit history and discipline have increased chances of getting a loan, and at a better rate.

“It makes a difference if you wanted to lend some money to an unknown man on the street compared to a friend, about whom you already have some information and whom you already know,” Ján Porázik, analyst of the Fincentrum company told the TA3 news channel.

The Slovak Banking Association (SBA) sees the reduction of credit risk as the main benefit of credit registers for banks.

“Information from the registers helps banks when checking clients’ ability to settle loans. Thus, they have a significant influence over the decision about the provision of a loan,” SBA spokeswoman Zuzana Tučeková told The Slovak Spectator. “If banks did not have this information at their disposal, the volume of provided loans would have been probably lower and simultaneously this might have reflected in higher interest rates”.

There are several banks registers in Slovakia. The National Bank of Slovakia (NBS) operates the Register of Bank Loans and Guarantees (RBUZ). It collects information about debtors of banks, which are corporate entities and private individuals doing business. Banks, branches of foreign banks and the EXIM bank are required to send data to the register on a monthly basis, while the data is kept there for five years, the NBS writes on its website.

“RBUZ has been primarily launched and operated for banks, branches of foreign banks and EXIM bank and the needs of the NBS,” NBS spokeswoman Martina Solčányiová told The Slovak Spectator. “The purpose of RBUZ is to share information for the calculation of the credibility of borrowers.”

Initially only banks were allowed to obtain information from the register, but later they were opened to businesses to obtain information referring to them.

There are also private credit registers, known as credit bureaus, the Banking Credit Bureau (SRBI) and the Non-Banking Credit Bureau (NRKI). The SRBI was launched in 2004 and is operated by Slovak Banking Credit Bureau (NBCB), owned by three banks, Slovenská Sporiteľňa, Všeobecná Úverová Banka and Tatra Banka. All significant retail banks operating in Slovakia participate in the register. The NRKI was launched in 2008 and is administered by the Non-Banking Credit Bureau (NBCB). It was launched by leading leasing and hire-purchase companies. The Slovak Credit Bureau (CRIF) provides organisational and technical support to both the registers. Both registers collect data on private as well as corporate clients.

According to Ján Budinský, the legal representative of the CRIF – Slovak Credit Bureau, data from the registers are of key importance for effectively checking the creditworthiness of credit applicants as well as their payment history. He stresses that the registers collect both positive and negative information about clients.

Porázik of Fincentrum explained that delays in paying off bills in instalments are noted, meaning a totally clean record shows that the debtor pays all instalments on time.

The main benefit of registers is that they allow speedy access to concrete and up-to-date information. This contributes to the effectiveness of the decision making and the reduction of risk for banks and other companies, Budinský said. Without it, he said, it would be more difficult for many people to get a loan.

According to Porázik, loan applicants must first allow the bank to look into its file to see their payment history. In cases where the applicant does not allow this, banks are given reason for concern and it is likely their loan application will be rejected or that the conditions will be stricter. Still, the final decision over the provision of the loan is up to the bank.

Banks are pushing for access to even more information about potential clients.

“We would welcome the possibility of keeping the register of individuals without their consent, which would enable the fulfilment of the principle of responsible lending, which is a crucial element in preventing excessive financial burden on the individual,” said Tučeková.

Data is kept in credit registers for five years after the loan relationship ends. The SBA is proposing to extend this period in some cases.

“We want to improve the functioning of the registry,” said Tučeková. “Such improvements will benefit good clients who settle their obligations properly and on time. And such clients are the majority.”

Simona Šabová is a student of the University of Economics in Bratislava.

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