Although the use of positive bureau data for credit decisions is quite new in Latin America, it’s gaining increased visibility.
In Brazil, a bill creating a positive bureau was signed by president Dilma Rousseff just months ago, after an eight-year fight. The bill will take time to be fully implemented, but as in other countries, the benefits will unquestionably be worth it—for both businesses and borrowers.
Now, the biggest challenge is to inform consumers about these benefits and their rights under the new bill. Consumer associations were (and still are) against the bill, citing privacy issues. But a closer look at the bill should help alleviate these concerns. Financial institutions can only use the data for credit purposes, and it can’t be sold or traded.
In addition, the bill specifies that each consumer must give full agreement to each financial institution to use his credit information, and can, at any time, ask them to remove data from the credit file. This is the most troubling aspect of the new bill. It greatly diminishes the effectiveness of a positive database if one can choose which institutions’ data will or will not be used, and for how long.