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4 Things You Should Know Before Embarking On Credit Bureau System | credit bureau system

Credit bureau system serves as a responsible enabler for creditors to access information on delinquent debtors to aid them in their lending choices in an orderly and objective manner. Although the various credit bureaus throughout Nigeria have in several ways extended credit to all economic sectors of the society, the efforts of these agencies are met with certain difficulties and setbacks. They cannot force the customers to pay what they owe because they have no legal authority or right to do so. However, having established a good and healthy relationship with these creditors and being able to build a positive rapport with them, the credit bureau system has now been made available online for the benefit of the various consumers and businesses in Nigeria.

The major reason for the failure of this system was lack of resources for the credit bureaus. They could not afford to maintain and upgrade their database systems to suit the current demands from all the financial institutions in Nigeria. They had also to maintain strict guidelines with the standards they set for the creditworthiness of each individual borrower. Hence, the credit bureau system that once had great promise has now witnessed a lot of problems from the various quarters.

The major problem faced by the credit bureau system was the failure of the customers and business holders to maintain their records for several years due to frequent failure to make payments or submission of incorrect documents. There was frequent incidences of non payment from both parties. There was also a lack of response or breach in terms of the disputes and case assessments. Thus, the overall performance of the credit reporting agencies had come under severe challenges from several quarters.

To deal with these challenges and improve upon their services, the government introduced an act known as the “Anti-Avoidance Act”. This was primarily implemented to regulate the collection of information provided by the credit bureau system. It mainly prohibits the collection of financial information provided by the consumers for their own use and to the third party. This would ensure that the system maintains its integrity and is not abused by either the consumer or the third party. This act also requires the credit agencies to inform the individuals about any breaches that have been detected. This would help them take measures to remedy the breach.

There was an urgent requirement for the consumers and business holders to have a clear idea about the creditworthiness of an individual. They needed to check this through the use of credit reports and other resources. Thus, this act imposed limitations on the collection of information provided by the credit bureau system. It also requires the credit bureau to provide a clear explanation to the consumers about the reasons for the denial of the creditworthiness. It also stipulates the right of the consumers to dispute any information provided by the credit bureau. The credit bureau must respond to the disputes within a reasonable time frame.

Today, there are numerous credit bureau systems in the market. These credit bureaus operate for the benefit of the consumers. The task of maintaining the records and information of the consumers and business entities has been entrusted to these credit bureaus. However, it is important for the credit report agencies to ensure compliance with the law and regulations related to credit report.

Under the law, there are three major credit reporting agencies established in the United States – TransUnion, Experian and Equifax. These three agencies are required by the Federal Trade Commission to maintain all records and data in accordance with the Fair Credit Reporting Act. It is mandatory for them to send the notifications to the consumers and business entities regarding any changes made in the credit report. The notifications are generally sent to the subscribers via the credit reporting agency and they are also sent to the parties who requested for the update.

The credit reporting act outlines the process to request a change in your credit report. If you find inaccuracies in your credit report, it is recommended that you write to the bureau or send a letter to the bureau. You may also join a credit repair organization. There are various legal professionals who can guide you through the process. You should also note that the credit reporting act does not allow the bureau to contact you or your employer without your permission.

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