Evaluating A Credit Bureau

With the dynamic and ever changing economic conditions that businesses operate in, information becomes a vital basis for decision making especially when its credit related decisions. Ever wonder where you can obtain and assess your business partner’s credit exposure? Credit bureau will be your solution to obtaining such credit information. A credit bureau can be broadly defined as an agency that researches and collects individual credit information and sells it for a fee to creditors to aid them in decision making.

How does one assess the quality of a credit bureau then becomes the key question for any businesses who is keen to join a credit bureau. Here are three factors you can look out for:

Typical components that contribute to one’s organization or company credit exposure would include payment behaviour/ profiling, past track records on credit repayment, total amount of overdue payments and any default on payments on suppliers.

While for an individual credit exposure will include on-going loans or active borrowing from other credit extending organization, any on-going litigation trace or past cases and past credit history activities.

However, besides such standard factors, some credit bureau went a step further to include character evaluation where matrimonial maintenance fees are included to give a more comprehensive credit exposure. This will give an indicator of one’s sense of responsibility towards their commitments which help to indicate if an individual will fulfil the repayment for the loan taken. MCYS has gazetted DP SME Commercial Credit Bureau as the official credit bureau to list down maintenance fees under one’s credit exposure.

Credit bureau works on a sharing basis among members and such data are highly confidential. As such, it’s always important to join a bureau where you know your information is handled in a secured and trustworthy manner.

The International accreditation ISO/IEC 27001 is a worldwide standard that covers the scope applicable to credit bureau information handling. Extract of the international standards is stated below:

“Provision of credit risk management solutions such as credit bureau services, business and individual information, credit risk assessment and ratings solutions in accordance to Statement of Applicability”.

Such accreditations would give you the assurance that information shared are properly handled and processed.

Credit bureau collates information via internal and external sources. With an extensive established network credit bureau will have a potentially stronger base through more avenues of information collections leading to accurate and relevant information being provided.

With more than 98% of the banks and financial institutions along with 75% of law firms using DP SME Commercial Credit Bureau it is a good indicator of DP’s network and working relationship and other organization’s trust in it.