New register will track personal credit histories for first time
THE Central Bank will create a register that will track everybody's credit history for the first time.
The Department of Finance said yesterday that it planned to ask the Central Bank to set up a register for every loan over €500. Banks and other lenders will be obliged to run credit checks on anybody trying to borrow more than €2,000.
The new register has to be set up by the end of September as part of the memorandum of understanding that accompanied the bailout.
Ireland is one of the few countries in Europe that does not have a central register to track borrowing. This allowed many developers and ordinary citizens to borrow from several banks without the various banks knowing that rivals were also lending.
The Government is now looking for advice after publishing a draft bill yesterday to establish what will be known as the Central Credit Register.
The Central Bank will be responsible for the register and will own the data, but it may employ another company to operate the database.
"The overall objective will be to establish a comprehensive, reliable and valuable registry of credit information," the department said yesterday. This will stop bad lending and also allow the Government to keep track of credit problems.
All borrowing stretching back to 2010 will be included in the register. This will enable the Central Bank to assign credit scores to people who want to borrow.
The draft bill includes provisions to protect people who are the victims of fraud and then find that their credit history has been damaged. It also includes provisions to allow challenges to a person's credit rating.
"Credit scores are widely used by credit bureaux and credit registries and are designed to give lenders a fast and accurate prediction of the risk involved in granting credit to a borrower. It can enable lenders to streamline the credit underwriting process and thus provide for a more efficient process for borrowers," the department added.
Credit scores are also good for new and small banks entering the market and may encourage competition, it added.
People will be allowed one free search of their credit file every year to ensure accuracy.
The bill will force banks to collect information on surnames, mother's birth surnames, addresses and postal codes when they become available as well as phone numbers.
Companies will have to provide information such as company registration numbers and VAT registration numbers.