Credit Bureau a sign of the times

The Cayman Islands National Credit Bureau is set to provide a new financial service for the Cayman Islands.

Directors Lindsay Bodden, Rayal Bodden and Garfield Joseph say the company will be able to benefit Cayman businesses and individuals through their credit history and debt recovery services.

‘It is our intention to be that much-needed intermediary between lenders and borrowers that facilitates the consummation of business transactions,’ said Lindsay Bodden.

Mr. Bodden says the company will store the credit histories of potential borrowers, which will allow a consumer to easily present their credit profile to any of the Credit Bureau members, thus aiding transactions between the borrower and the lender.

‘Essentially, the Credit Bureau’s functions are to provide a lender with the facility to limit their risk factors in extending credit,’ said Mr. Bodden.

‘The service also gives the borrower the benefit of being in a position to accurately and expeditiously give the lender a picture of their credit history.’

This is the first time this benefit has been realized in the form of a Cayman Islands business that has been open to both lenders and borrowers.

‘The information supplied to our members is only supplied by the consent of the borrower, who is the owner of the information, and by their consent, the lender then extends that information to the credit bureau,’ said Mr. Bodden.

‘But only a delinquent loan goes on what’s known as your credit record,’ he said.

Express permission by the consumer is required if their credit information is to be submitted to the credit bureau, but consumers should be aware that if consent is given, this also implies consenting to submit retroactive information, including their credit history.

Consumers should also take note that if a company decides to join the Credit Bureau, it will inform clients by letter that it is sending the credit information over to the credit bureau for storage. Clients can refuse consent, but non-response will be taken as implied consent.

If a consumer seeks credit by, for example, applying for a loan at a bank that is a member of the Credit Bureau, the loan document will likely contain a clause that allows the bank to obtain consent to seek, obtain and divulge this information to the Credit Bureau.

Lindsay Bodden said the idea for the business came about in the recognition that there was a need for a credit bureau in the Cayman Islands. The service is widely used in other jurisdictions as it is seen to give a realistic way to verify a credit application.

However, as the Credit Bureau is essentially a data storage service. Consumers are ultimately responsible for ascertaining their credit information is accurate.

This is especially important as retailers and insurance companies, for example, if they are Credit Bureau members, will be able to share this information and make lending decisions based on it.

The benefit for members is that they are alerted about credit checks conducted on potential clients, and they can thus more accurately judge how a potential creditor is viewed in the community.

The Cayman Islands Credit Bureau relies on sophisticated software and web-based information management, which it assures is secure, as all entries can be made only by members using passwords issued by the Credit Bureau and inquiries are recorded and tracked.

Rayal Bodden said the sophistication of such systems requires constant vigilance and updating, which the Credit Bureau is fully equipped to undertake.

The Credit Bureau will also feature a debt recovery service, acting as an impartial intermediary to collect delinquent debts.

Rayal Bodden says the Credit Bureau’s debt collection service will allow businesses a more timely and efficient use of their resources and help them regularize the payments owed to them.

‘We see our role as the much-needed intermediary needed to alleviate the pressure between lenders and borrowers,’ he said.

‘It’s difficult for businesses involved in sales to simultaneously be in charge of collecting payment, especially in small businesses where it’s the same people involved in both activities.’

Furthermore, he said many businesses have to operate on a significant profit margin knowing that outstanding debt is a major part of doing business. If the amount of available cash to cover operating expenses can be reduced, businesses will have more money to invest in other things.

‘We’re excited about the opportunity to assist the credit community with a much-needed service,’ he said.

‘But we want to assure people that when an account is turned over to us we will take every measure to take due care to work sensitively with the affected parties to resolve the situation in a dignified way.’

Lindsay Bodden said the Credit Bureau will be able to help people with good credit to capitalize on it by getting better loans and bolstering their reputations.

And for people with poor credit, he says the company will be able to assist them in improving their credit status and to avoid overextending themselves financially in the future.

‘It’s not something to be ashamed or afraid of – it is a matter of being realistic with your finances, making a plan, and sticking with it,’ said Lindsay Bodden.

‘We hope every business that is eligible to join the Cayman Islands Credit Bureau will decide to, so that we can paint a better picture of what is going on in Cayman credit-wise.’

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