The UAE will in July roll out phase one of a platform that will allow financial institutional in the Gulf state to check consumers’ creditworthiness before lending to them.
Al Etihad Credit Bureau, set up by the federal government in early 2012, announced at a press conference that it will commence the collection of consumer credit data from a pilot group of financial institutions in just over a month’s time.
Data will include that on individuals’ credit applications, payment behaviour and debt records from not only lenders, but also telecommunications companies and other financial services providers.
“As well as helping lenders make faster and more accurate credit decisions, the information held by the credit bureau will help individuals to understand and improve their credit worthiness, and potentially lower the cost of credit for good borrowers,” commented Younis Al Khoori, chairman of Al Etihad Credit Bureau.
“The International Finance Corporation recently reported that the probability of obtaining a small bank loan for a small business increases from 28 percent in countries without a credit bureau, to 40 percent in countries that do have a credit bureau,” he added.
Al Etihad said that phase two of the initiative will see the launch of a commercial bureau, as well as the phasing out of bounced cheque reporting. Phase three will include the introduction of value added services for lenders, while individual credit scores based on historical data will make up phase four.
The credit bureau did not provide a timeline for the forthcoming phases.
Hussein Al Qemzi, CEO of lender Noor Islamic Bank, welcomed the project: “As lenders, it will enable us to better assess the credit worthiness of applicants, for personal loans or credit cards. It will provide the means to check if customers have debts spread across a number of different lenders,” he told Arabian Business.
“For customers, it will speed up the approval process and it could also lead to better pricing and improved products,” he added.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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