Address credit report gaps

• The credit reference bureaus and lenders should redeem faith in the listing through thorough due diligence and verifying with borrowers before putting blots on their credit history.
• Using credit referencing to deny borrowers’ funds instead of to adequately compensate for the risk through higher interest rates and attendant conditions has also left banks looking too eager to sidestep the fine print of the law.

When credit referencing was introduced two years ago, it was expected to drive the lending sector forward through accurate assessment of a borrower’s ability to pay.

However, the experience so far has left plenty to be desired, leading to court cases where borrowers are challenging the information that reference firms relied on to declare them high risk.
This suggests more needs to be done before the assessments of credit worthiness can achieve the overall goal of minimising bad debt and making lending more affordable to the majority. What is clear is that the law setting up the credit reference bureaus does not need much tweaking.

Most of the cases relate to allegations which, for the credibility of the system, had better be found untrue. These range from failure to update files, broadly defining default to include failure to formally close accounts; treating ledger fees as loans and, in the latest case, extending a loan to a fraudster and blaming the victim without adequate background checks.
The credit reference bureaus and lenders should redeem faith in the listing through thorough due diligence and verifying with borrowers before putting blots on their credit history.
Using credit referencing to deny borrowers’ funds instead of to adequately compensate for the risk through higher interest rates and attendant conditions has also left banks looking too eager to sidestep the fine print of the law.