Finally, the Philippines has an answer to the perennial problem of access to credit that hinders growth of the micro and small enterprises. This time, access to credit is becoming more inclusive as companies and individuals’ credit worthiness are no longer weighed based on their hard assets but on their reliability as a good payor based on their credit history.

Marlo R. Cruz, a former banker, now heads the country’s lone local credit information and credit score company CIBI Information Inc. Cruz sees the opening of floodgates of opportunities for all Filipinos, especially the unbanked sector, to access credit without hard collaterals.

CIBI Information Inc., also known as CIBI, is at the forefront of this effort towards financial inclusion. By being the Philippines’ first and only local credit bureau since 1982, CIBI is nurturing its expertise through its vast affiliation, effective methods and renowned credibility, validated by esteemed clients and recognized by the Philippine government.

Through its partnerships with internationally acclaimed consumer credit score providers, CIBI is a premier source of globally-accepted credit scores to support the financial growth of every Filipino, locally and abroad. CIBI knows every Juan better and aims to contribute in the growth of the economy by transforming the “unbanked” into bankable individuals.

CIBI’s credit scoring system is derived from robust local data that makes it an effective tool in supporting efficient credit channel facilities for financial institutions; easing loan application approvals; and helping the development of MSMEs.  “CIBI is your local gateway for credit information and background checking services expertly designed to global standards. Because in transforming the lives of every Filipinos, there is only one credit bureau you can trust,” says Cruz.

Cruz recalled that 36 years ago, someone was able to pull off financial paper and absconded to Canada illegally bringing with him P200 million. This has forced then Central Bank Governor Jaime Laya to establish a central information repository with Credit Bureau Information Inc., but the law had no teeth.

The government had decided to sell CIBI to the private sector in 1997. The BSP and Securities Exchange Commission’s stakes were bought out by private investors in 2007. The responsibility to run CIBI was offered to Cruz, who at first was very hesitant but was persuaded because as user of credit information he is in the best position to run this kind of institution.

He was formerly a Division Head for Credit at PCI Leasing and Finance, Inc. in 1997-2007. Marlo has his expertise in leasing, credit and finance for over 28 years of practice. He also administered Credit Management Association of the Philippines (CMAP) as President in 2003, 2005 and 2006; and became an SEC Accredited Compliance Officer in 2004.

When RA 9510 or the Credit Information Systems Act was put into law, the new CIBI management rehabilitated the company. CIBI became one of the four government accredited credit information bureaus and the only local firm with special accessing entity of the Credit Information Corp. (CIC), the central credit information repository of the government. It was up against the giants – Transunion of Chicago, CRIF of Italy, and Campuscan of South Africa. Their clients are all lending institutions such as banks and even the Social Security System.

Cruz has also scaled up their capability by doing value addition to the data they accessed from CIC. That is where they came up with the credit risk rating for companies and credit score for individuals.

Credit risk rating/score

CIBI is using a 3-digit numerical determination of credit worthiness of an individual with the lowest at 300 and 850 as highest. The score is based on all data available in the CIC and in the market.

From the gathered data, CIBI analyzes the individual’s credit worthiness. Most of these data include an individual’s payment history of his loans, utility bills, cellphones, among others. CIBI has moved up from a mere credit information provider to a functioning credit bureau.

“We now moved to the next level meaning we are now determining the credit worthiness of the individual,” he said. The credit score or risk rating will be used by their clients as basis to grant or deny an individual’s credit application. But CIBI still maintains their credit information function especially in their dealings with BPOs to ensure that employees handling backroom services of the bank is clean.

The credit bureau service is just taking off and just in time for the new challenge as they spearhead in changing and innovating lending systems in the Philippines from asset-based or physical collateral of assets and into risk-based through the determination of a company’s credit risk rating and an individual’s credit score.

Cruz explained that the determination of credit worthiness can only become predictive if the individual has a robust data to analyze. For instance, an individual who pays his phone bills on time can have lower credit score, than an individual with more credit history like bank loans, utility bills, SSS loans and Pag-Ibig, credit cards, among others.

“The more robust data you have, the more predictive you become,” says Cruz.
As such, Cruz has encouraged everyone to build a credit history.
“I am doing this to my children by getting credit cards and pay them on time because you are young and you are already developing a credit stature,” he adds. The credit score will build a profile of your payment habits, the regularity of your payments.

New oil

“Credit information has become a business,” he says. For example, if a trader or manufacturer does not know a certain company in Singapore, who wants to do business with him, he can go to CIBI to check on the potential partner’s credit information like financial capability, corporate information, how profitable the company, how reputable the company as part of its due diligence process.

“This is to ensure that they are not dealing with fly by nights,” says Cruz.
Unfortunately, information gathering is still 50 percent physical and 50 percent from online. With artificial intelligence (AI), Cruz said analytics can now be done easily. For BPO dealings alone, the information analysis has a turnaround time of 3 days from what used to be 30 days.

By Bernie Cahiles-Magkilat

Read the full article here : Manila Bulletin Website