The Credit Bureau Singapore (CBS) is a private company owned by the Association of Banks in Singapore (ABS) and DBIC Holdings, a unit of information management company Dun & Bradstreet.1 It was set up in 2002 as a financial risk management tool for banks to assess the risks of extending credit to a potential or existing client by providing them with a credit report on the borrower.2
Some of the information provided in the credit report include the borrower’s credit history, credit repayment trend and, if any, records of defaults, litigation and bankruptcy.3 The report is generated from information provided by participating financial institutions and public sources such as court writ of summons and bankruptcy data.4
Originally proposed by the Monetary Authority of Singapore (MAS) in 1977,5 it took nearly two decades of discussion between MAS and the financial institutions to set up the credit bureau. The bureau failed to materialise because the banks were reluctant to share the credit information of their customers and bank customers were unhappy over the potential loss of financial privacy.6 The banks were also concerned that the shared information could be exploited for marketing purposes.7 In 1984, MAS brought up the credit bureau idea again but it was again rejected by the banks for similar reasons.8
The advantages
The argument for setting up a credit bureau was that it would improve the way that financial institutions assessed loan applications.9 Prior to the establishment of the credit bureau, banks in Singapore had individual systems of credit risk assessment based essentially on factors such as income tax assessments and informal sharing of the customer’s credit information between banks.10
The creation of a centralised repository of credit information for financial institutions would also speed up the credit assessment processes as well as lower costs.11 It also allows financial institutions to create a wider range of credit products at more competitive pricing for customers of different credit standings.12
Information security
To safeguard the information of consumers from potential abuse, CBS follows a strict code of conduct.13 The bureau’s data can only be accessed by participating financial institutions. The information can only be used for evaluating the credit worthiness of borrowers. Under the Banking Act, financial institutions are prohibited from disclosing the information to third parties. Another regulation prohibits the bureau from collecting such personal data as addresses, contact numbers, credit limits, and net worth.14
The credit bureau allows bank customers to access their own credit reports. This service was included so that consumers can check up on their own credit history when thinking of applying for more credit.15 Consumers can also use this service to report discrepancies in their credit history.16
Author
Lim Tin Seng
References
1. Chan Chao Peh, “S’pore’s First Credit Bureau Launched,” Today, 16 November 2002, 10. (From NewspaperSG)
2. Hugh Chow, “Credit Bureau Will Reduce Risks and Lead to More Loans,” Straits Times, 1 February 2002, 12. (From NewspaperSG)
3. “The Nuts and Bolts of a Credit Report,” Straits Times, 10 October 2004, 23. (From NewspaperSG)
4. “Nuts and Bolts of a Credit Report.”
5. “Credit Information Bureau Proposed in 1977,” Straits Times, 9 December 1984, 2. (From NewspaperSG)
6. “Credit Information Bureau.”
7. Ignatius Low, “'Launch in Q3' for Planned Credit Bureau,” Straits Times, 19 January 2002, 20. (From NewspaperSG)
8. Conrad Raj, “Fresh Move to Set Up Credit Data System,” Straits Times, 21 September 1984, 24; Conrad Raj, “Banks Say 'No' to Credit Information Bureau,” Straits Times, 5 March 1988, 19. (From NewspaperSG)
9. Chow, “Credit Bureau Will Reduce Risks.”
10. Chow, “Credit Bureau Will Reduce Risks.”
11. Chow, “Credit Bureau Will Reduce Risks.”
12. Monetary Authority of Singapore, Annual Report 2002/2003 (Singapore: Monetary Authority of Singapore, 2003), 38. (Call no. RCLOS 332.495957 MASAR-[AR])
13. Monetary Authority of Singapore, Annual Report 2002/2003, 38.
14. Ong-Ang Ai Boon, “Credit Bureau to Go By Strict Code of Conduct,” Straits Times, 12 June 2002 16; Chan, “S’pore’s First Credit Bureau Launched.”
15. “The Consumer Credit Bureau: How It Affects You,” Today, 16 May 2006, 30. (From NewspaperSG)
16. “Consumer Credit Bureau.”
The information in this article is valid as of 12 May 2014 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.
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