what is a credit bureau?
Suppose that a business owner dreams of expanding her small shop. Her idea is sound, and growth would mean extra revenue and jobs for the local community. However, she lacks capital. A bank, microfinance institution (MFI), or credit union (CU) wants to lend money, but . . .
| There is a problem: - |
it lacks access to the customer's credit history, meaning the record of her prior repayment of loans, utility bills, and other debts. |
| The result: - |
the lender must decline her application, expose itself to unknown risk, or charge a high - and maybe prohibitive - interest rate. |
A credit bureau bridges this information gap between loan seekers and lenders, introducing objective factors, as found in credit histories, into risk analysis. Banks, MFIs, and CUs better protect their portfolios against default. And good debtors, freed from the burden of paying for bad credits, attain loans at accessible interest rates. We at the Credit Information Bureau "Ishenim"™ therefore view our function as not only economic, but ultimately humanitarian in nature.
what is a "best practices" credit bureau?
According to the World Bank, the ideal credit bureau:
- compiles both negative and positive information
- includes both individuals and firms in its database
- collects information not only from lenders, but from other businesses, such as retailers, telecommunications companies, and utilities
- preserves data for a period of at least five years
- obtains information on all loans made within a market
- provides consumers access to credit histories, and permits correction of errors
The AFCO CIB "Ishenim"™ currently meets most of these requirements. In partnership with the government of the Kyrgyz Republic, we are close to achieving a legal framework that enables full attainment of these objectives.
The report on activity for the 1 quarter of 2009 (download...)
