Just recently, the world celebrated Data Privacy day. January the 28th is the day designated for the annual celebration and observance of the importance of Data Privacy. Data Privacy Day has its origins in the United States and Canada in January 2008 following from the efforts in Europe with their Data Protection Day celebration and the day January 28 was selected for Data Protection Day to commemorate the January 28th, 1981, signing of Convention 108 which was the first legally binding international treaty dealing with privacy and data protection.
Since 1981, privacy and data protection have become essential elements for most business operations and a concern for many in our daily lives. As we continue to evolve into a digital society in which there is an increasing reliance on information technology, there will be an apparent need to upload, use, collect and share our personal information for our daily operations and transactions on digital platforms. However, as of consequence of our movement from a paper-based system to the globally connected digital platforms, is the increased risk and easier ability to access and use the information which is being collected, stored, and transmitted via these digital mechanisms. In a paper-based system, the emphasis was placed on simply ensuring the premises were secured, however, in a digital platform there are no physical structure and boundary as information transcends across countries. Hence, there is a need to adapt and ensure effective measures are implemented to place a firewall of protection against any potential invasion of the privacy and rights of those to whom the information relates to i.e. the data subjects.
Privacy has served as an important legal and psychological concept of human society almost akin to an innate feature of human existence. Therefore, as our society progresses to a digital domain that inherently facilitates convenience and ease of access, there should be also the advancement of discussions and greater awareness to ensure the protection of the fundamental rights of our societies that is privacy and more specifically data privacy and access is granted when the owner of the information permits.
Information based businesses are in a gold rush phase as information has become a leading global commodity akin to that of gold and money. Information is often being traded due to its expanding value and, at times, traded without the knowledge or consent of the data subject.
The Caribbean Credit Bureau is an information-based business and in the absence of specific regulations, we have adopted a standard of service which is premised on the fundamental principle that the consumers’ data is their own. Therefore, to use or access such data there is the need to acquire the consent of the consumer (data subject).
Whilst information is to be valued, it should also be protected. Thus, in addition to recognising the rights of the data subject to control their data, there is also the need to recognise and implement appropriate measures to ensure a high level of confidentiality, the prevention of unauthorized access and misuse of data.
As technology evolves, so too must our efforts to ensure data privacy.
A credit report seeks to provide an objective basis for determining someone’s eligibility for credit. An independent entity i.e. a credit bureau collects and discloses the credit information of an individual by way of a credit report. This credit information shows how they would have serviced their debts in the past to provide an unbiased gauge of their credit risk and therefore their likelihood of meeting the credit requirements in the request to be extended credit. This tool seeks to circumvent heavy reliance on personal interviews and other means in the evaluation of applications for credit by which subjective factors such as race and gender may come into play.
However, research in the United States is showing that within the very use of credit information there appears to, unfortunately, be a deep-rooted, underlying presence of discrimination stemming from the historical injustices and racial economic divide and disadvantage of those of African descent. Such has the potential to allow the issue of a general lack of financial access in the African American community to persist to this day thereby perpetuating the historical injustices and disadvantages suffered by those in that community.
Thus, in the American context, as they go back to review the history of credit information, they also take into account and incorporate the past historical disparities stemming from race and that lack of it by a racial group and thereby leading to the further restriction of it.
Research in the United States of America highlights that 1 in 3 Black households did not have enough credit information to generate a credit score (known as having a 'thin' credit file), while only 18% of White households had a thin file. With lower or a general lack of credit information such persons may have no choice but to access credit under extreme measures with higher interest rates and stricter terms thereby placing harder burdens in their access to finance and their ability to repay under such harsh stipulations.
A possible solution raised as part of the recent presidential campaign by the Democrats is the proposal of a new federally backed credit bureau premises of algorithms that included non-traditional sources of credit data such as rental history and utility bills. The use of such information may pave the way for those within the African American community to build a credit history and have credit information available to be in a better position to access finance through the traditional credit institutions.
We are aware that as part of any application for the extension of credit such as a loan or the subscription to a new utility service, the institution may conduct a credit check to determine our eligibility and credit risk. However, when applying for a job, being promoted, or seeking to serve on a board, we may be presented with the request to conduct a credit check or provide a credit report. In such an instance, there is not the typical request for extension of credit or subscription to a new service and, therefore, we may question the basis under which the employer or corporation will be seeking to investigate our credit.
There has been an increasing desire from employers and corporations, as part of their hiring or promotion process, to have a review of a credit report to determine whether to appoint board members or hire employees. Credit assessments are performed in addition to the other background checks done.
Credit checks will usually be required for posts involving high financial responsibility, access to funds, security or access to confidential or sensitive information. In those situations, there will be a concern of the risk of financial impropriety, bribery or other fraudulent activity which the companies are trying to avoid by assessing the likelihood of the person becoming susceptible to such. It is believed that credit checks can therefore mitigate against such risk of theft or embezzlement by assessing the person's financial stability and debt evidenced through their credit report. It is taken that a person in financial distress may be more susceptible to misappropriation of funds and therefore when such signs are evidenced by the credit report of a potential hiree, that person may not be considered the best fit for the company.
Credit checks would usually require consent and therefore that request to conduct a credit check can be met with a refusal, but that refusal may also result in a denial of the job. Hence, the refusal of a request to conduct a credit check may be tough especially since credit checks are usually conducted after successful interviews. This, therefore, means that the candidate is usually shortlisted to be hired. Hence, if you know you are seeking a security post or where managing finances and/or having access to funds are a key component of the job description, consider being proactive and review your credit report ahead of time and correct any inaccurate information that may be present.
Taking credit or in other words, incurring debt is often viewed under a negative light. There are famous sayings “Better to go to bed hungry than to wake up in debt.” or “Every time you borrow money, you are robbing your future self.” These are just a few quotes that highlight the pessimistic outlook many have on the concept of credit or debt. The daunting incidents of foreclosures or repossessions would also make it easy to understand why many adopt such a view. However, in our line of business, we see both ends of the two-sided coin that is credit and thereby recognise the benefits that credit may have when it is used and managed responsibly. We try to make credit work for you!
First, the apparent benefit of credit comes from the spending power that it can provide to many who otherwise would not have the ability to achieve their financial goals at the rate to which they would have in the absence of a loan or credit facility. Additionally, in most modern societies, there is an increasing need for a credit history to obtain not only a loan or mortgage but also to subscribe for certain basic services such as a mobile phone plan. By not having any credit history, which is usually developed by having engaged in credit transactions, a person may be placed at a disadvantage. An institution may request that a deposit be paid by that person to compensate for the uncertainty surrounding their ability to repay a debt as that ability is usually evidenced by their credit history. A credit history serves as a guide or predictor of how a person is likely to repay the current credit transaction they are seeking to enter into and without such a guide, most institutions have to resort to other means to mitigate against what they may view as a potential risk. However, we cannot ignore that with credit there is a risk when it comes to repayment. But life is full of risks and sometimes it is a question of ‘take the risk or lose the chance’.
Being responsible with the use of credit can make credit work for you and in so doing there is a need to ultimately understand the ultimate cost of credit. Prior to obtaining credit, one should ensure that they fully understand the repayment terms. Take time to go through with a representative the specific terms of repayment and consequences of missed payments. Try to understand the interest rate and determine whether the repayment terms make financial sense in considering all those factors and whether it is affordable. In determining the financial sensibility and affordability of the debt, the repayment sums should be placed in your budget, remembering to always budget for more than the minimum amount for repayment. Inquire about whether there are any additional fees as such should also be included. Also, consider whether something occurs that affects the ability to repay for three months whether this will have a detrimental impact on the ability to service the debt moving forward. As it relates to credit cards, if you are unable to clear off the amount extended by the end of the month, calculate the length of time you are likely to take to repay such with the interest that would be incurred, to determine the true cost of the credit card transaction you are seeking to make, then ask yourself whether it is worth it and whether you would likely have to use the card again and thereby increase the amount that the interest rate would be applied to. Once the debt is obtained, try to pay off more than the minimum amount and review statements of the repayment closely and do your reconciliation.
Prior to COVID 19, there was already a push by financial institutions to transform their application processes from an “in-person” process to an online platform procedure offering a more convenient process to consumers. However, as a result of COVID 19 and the implementation of lockdowns and various restrictions regarding the movement of persons, out of necessity, that push by financial institutions became a catapult into the realm of online applications and approvals within the credit industry. Many of us who are accustom to the traditional process may feel a bit hesitant in transitioning into this new forum. To assist and continue to make credit work for you! here are a few tips to help guide you.
Conduct your research and make inquiries With the transition to an online process, most of the information about the various financial products and loans are available at your fingertips online. Therefore, rather than undergoing the time-consuming effort of visiting various institutions to make queries in determining which option is best for you, you can review the information from the various websites to obtain a preliminary view of the financial products being offered. By researching online, you may also avoid credit checks being conducted through the in-person visits to the financial institutions as agents will usually seek to obtain a preliminary review of the consumer to be able to better advise or answer their queries. This will result in credit checks appearing on your credit report which may raise an alarm to future creditors.
The online platform may also provide more information such as customer service reviews which may not have been otherwise readily available to you. However, despite the fact that some information would be online, always try to confirm such details or ask questions through a direct call or email to the financial institution or using one of the online chat agents, if available. Remember, most websites may have a disclaimer regarding the accuracy of the information posted, its dependency on certain terms and conditions or the liability for it to change. Therefore, before acting upon the information always seek confirmation as to its accuracy and its applicability at the present moment and your particular circumstances. Also, try to obtain an estimation of the timeframes for the online application process and the manner of finding out whether it was successful. Do you have to log back into the system, will an email be sent, will you get a call to confirm such?
Check your credit report Not only should you research the financial product and institution but also research you. Review your eligibility like how you believe the financial institution would. The review will usually involve your credit report. You can request a credit report. Remember you are entitled to at least one free credit report a year. By having a report before applying you can see whether there is any inaccurate information provided on the report that would need rectifying prior to submitting your application or whether you have to prepare yourself to answer any questions regarding your credit ratings. To improve your chances of success for the application, a credit report can also highlight whether you have any accounts with small balances to clear off to improve your debt to income ration or whether you should bring any accounts that may have been in arrears current.
Make sure the information provided is Accurate and Complete First, some applications have required fields that failure to insert information will result in the inability to proceed with the application process. However, even where the field is not a required field, an omission of any particulars may delay or halt the approval process. Therefore, it is also best to complete the application in its entirety. Further, in this age of strict compliance and due diligence requirements within the financial sector, the information provided would be verified. Ensure that the most accurate information is therefore provided. Usually, a more informal approach is taken to things done online where nicknames are used or things are conducted on a first-name basis. However, an online application process is still a formal process. Ensure that your full legal name is submitted, ensure there are no mistakes in name, address, contact numbers or email address etc.
Having Supporting Documentation Have all of the information you may typically require for an in-person application process such as bank statements, salary slips, personal identification cards and driver’s licence etc. Even though it is online, the qualifying criteria will still follow the standard traditional process.
Have your e-signature ready or other electronic tools Remember, there will most likely be the standard requirements for signatures on online applications, there may be a need ahead of time to figure whether an e-signature can be applied or whether you may have to print and scan your signature. Your supporting documentation may also have to be scanned and uploaded as well.
A credit bureau is an information business. It seeks to bridge the gap between the creditor and the consumer to aid in the financial transaction they will be seeking to engage in. We all know the problems that may arise when there is a lack of information. There is usually confusion, misperceptions, misunderstanding, bad decisions, and regret. To avoid such, credit bureaus or credit reporting agencies in their intermediary role collect information pertaining to the identity of the data subjects and the corresponding account information and in particular their payment history from various creditors. The information collected is compiled and consolidated in the format of a credit report or credit score to be used by authorized creditors or the consumer. Thus, a credit bureau serves as a record keeper organizing and noting the credit history of the data subject as furnished by the creditor. However, a credit bureau does not make its own determination as to the creditworthiness of a data subject but rather the creditworthiness is merely reflected based on the information provided by creditors.
This information reflects the credit history of the data subject thereby showing how the data subject paid or is currently paying their debts or services. This historical information in turn is used by creditors in their analysis of the prospective client viability to qualify for the loan or service being sought. With such information at hand, a creditor is better poised to make well-informed decisions and avoid the misperceptions that arise in the absence of information. The credit report aids in the evaluation of any potential risks and is a major factor in determining whether to extend credit or engage in a credit transaction. The credit history serves as a predictor of the person's likelihood to repay the debt or make the payments. It can also be used to gauge whether a person may have the means to repay the debt or whether they are already heavily indebted. The consumer who has a good history of paying debts can use a credit report to avoid some of the stringent terms that can be imposed by institutions as a means of mitigating against any risks of defaulting such as paying a high deposit or provide some form of collateral. Not only is the information used in instances where a credit transaction is occurring but it may also be used by employers as a means of screening a prospective employee to determine the suitability to be entrusted in what is usually a post which requires the upmost financial propriety.
As said by Williams Pollard, information is a source of learning. But unless it is organised, processed and available to the right people in a format for decision making, it is a burden, not a benefit. Credit bureaus undertake the burden of information to ensure that is it a benefit for all and make credit work for you!
Christmas is soon here and as we hear those sleigh bells jingling, we know that sometimes our money would be haemorrhaging to and many friends are messaging, texting, and calling “Yoo hoo”.
With all the jovial banter aside, this will be a tough time to maintain the budgeting plans and goals that were set earlier in the year. Yes, it may have been a tough year and there is the desire to splurge a little, but it is these budgeting plans that are keeping many afloat in these tough economic times. So, to help you get through this Christmas period here are some tips that can result in an enjoyable Christmas without necessarily have to give up on the budgeting system that was implemented.
As raised in a previous article, it was recommended that you should attempt to save for specific events, like back to school and hopefully, you included saving and budgeting for Christmas in your plans. If you have not done so or you were unable to, maybe this is your make up Christmas where you would start saving for Christmas next year.
If you are a part of a large family or have many friends, rather than buying a gift for a person as you may feel obligated to, think about suggesting a gift exchange so there is still that spirit of giving but each person is limited to one gift and there is a limit on the amount that should be spent on any gifts. If you are spending extra money this Christmas, do record your spending and place in an excel sheet or a piece of paper to have a visual of the amount you are spending and when you have met your budget stop. It is easy to get carried away around this time.
However, maybe you can try not to spend any extra money and let this be the year to be creative. Instead of purchasing gifts, you can give of your time or give the added personal touch of a homemade gift. Ask yourself what skills do you have, are you a good cook or a good artist? Maybe, you can give a friend or family member the baking, cooking, or painting lessons to learn a new skill in something. For many, Christmas means a full thorough cleaning of the home and this process can be used as a means of identifying things that can be sold for extra money, repurposed or regifted.
Consider making your own Christmas decoration and think about alternatives to the fancy trinkets or trimmings we may purchase, for example, you can reduce the expense of buying gift wrapping paper by using alternative paper or plastic tablecloth, or perhaps instead of fancy bells try balloons to bring a bit of the festive spirit.
Create with your heart and build with your mind. Happy Holidays from the team at Caribbean Credit Bureaus Ltd and Creditinfo Barbados!
Have you ever wondered where did the money go? Most of us have or are still going through that dilemma and maybe it is simply a matter of us, not budgeting.
A budget is an outline of income and expenditure for a set period which can serve as a financial plan and should be re-evaluated periodically. No matter your financial position, a budget can always serve some purpose.
By going through this process, it puts things in perspective with a bit more clarity than you may have had before. It helps identify where and how your hard-earned money is being spent. It can also highlight the possibilities available to you, identify and warn of potential financial problems, outline whether you can take on additional debt or whether you can maximize your savings.
By planning and knowing your current financial position, the budget helps to keep individuals focused and making informed and intentional decisions for their spending. For those with families or in relationships, this may also help facilitate those daunting financial talks by simplifying things into basic figures and presenting a visual aid.
Here are a few tips for helping you along the way:
Start with the most important expenses, those staples in your life, and no I do not mean the coffee. The basic amenities, Shelter, Food, Transport, and Utilities should be set out. Save those receipts! Check your receipt for the last couple of months to get a better idea of how much you are spending and incorporate those expenses into the budget. Remember, you may have to revisit these to begin to reduce some of the amounts if your budget is in the red.
Continue to think about all other expenses you may have missed and remember, when budgeting you may want to establish separate savings funds for major expenses that you know are coming throughout the year. For example, the upcoming insurance payment, car maintenance, or back to school shopping may be tough to tackle with one month’s budget, therefore, have a separate fund from your regular savings to address these incoming expenses to make them more manageable. Record your spending, still keep those receipts, and track your progress. Reevaluate and be realistic.
Let your savings account be that a savings account and keep a checking account for expenses outlined in your budget.
Budget in the Red
Reduce Expenses and Eliminate Unnecessary Expenses
Wherever there is the granting of credit or services with the hope of receiving payment after providing such, credit management will be the core feature in the success or demise of that company. In the midst of COVID 19, it is essential for the survival of those companies within the credit industry to implement efficient and effective credit management techniques to mitigate against the increased risks that are present and more prominent due to this global pandemic.
It is apparent that the COVID 19 pandemic will have an impact on the economies of our nations with damaging effects on the credit industry. The shut-down measures implemented globally because of COVID 19 led to a loss of revenue and income for many, the complete closure of business for most which will, in turn, affect the performance of existing loans and servicing of debts. Further, where cash flow and funds are not readily available for individuals to conduct business, then there will be a drawdown on what credit facilities are available to them. Therefore, many institutions found themselves having to facilitate the further extension of credit with a significant decrease in their own cash flow due to the failure of individuals and companies to pay debts during the shutdown. In the United States, it was reported that nearly 15 million credit cards were not paid in April as such, financial hardship programs with deferred payments were allowed.
In such a climate, there is a need to get ahead of potential risks and conduct an analysis of credit portfolios, noting individuals or companies that operate in sectors still viable or those that are consumer-based services that would more than likely be significantly impacted. Understanding the situation at hand is an integral step in beginning to manage credit risk to be faced by financial institutions. It may be also helpful to categorize the industries by risk grades.
Another useful step is to review the financial products being offered as this climate may require additional protection through requesting collateral for higher risk industries or higher deposits. However, in noting the preventative aspect of credit risk management, there will be an increasing need to analyse the creditworthiness of the customer that is seeking credit. It is in this aspect where credit reports which also feature disaster credit scores can aid. In reviewing the standard credit report, individuals would be aware of how a person serviced their debts previously prior to COVID 19 which can serve as a good indication as to how they will service their debts in the future, provided that they have not been significantly affected financially by the pandemic. However, if a disaster credit score is also provided this may present a better idea of how that person has been able to service their debts amidst the crisis. Company policy may then be developed to determine whether allowances would be made for those temporarily affected. Thus by conducting the assessment through an analysis of one’s credit report supported by a review of the background of the client, the industry that they are in, and whether it is one not viable in the present crisis are all measures to employ for managing the credit risks. Institutions may have to question whether the potential client has demonstrated the ability to adapt and transition to meet the circumstances.
On the other side of credit management, the recovery on credit already extended (debt management), ensuring effective consumer dialogue and communication in a manner that notes their concerns but also offers some debt management tips in the active management of their accounts can go a long way. Opening the line for dialogue and communication may ensure that attention is paid to your debts which should in turn, when circumstances permit, result in payments of your debt. As we seek to digitalize and go online, we cannot forget that human relations and interaction still goes a long way.
The month of April is used to celebrate and promote financial literacy and the development of financial skills to effective aid with financial planning, management of personal finances and the navigation of financial concepts in the financial sector. When individuals are equipped with such skills and knowledge, they are likely to be fiscally responsible and financially stable which results in economic growth for societies.
We all operate and interact with the financial sector in some form or fashion, therefore financial literacy is not simply for those who work within that sector. It is therefore recommended that greater emphasis by placed on ensuring the education system adopt a policy to promote financial literacy within the curriculum of the schools starting from the primary level. With such programs in place, the next generation would be empowered to advance financially. However, financial literacy should not be left to the education system, as steps can be taken to promote financial literacy at home within the family such as engaging everyone about spending and budgeting as well as financial planning for the future. If financial literacy is not adequately promoted in school or within the family, there are simple steps that can be taken to develop or increase your financial literacy.
• Read a book or journal on financial topics Use the public library or make use of the many free resources online to aid, to develop or enhance your financial literacy and awareness. Take on the challenge of learning and therefore make notes as you go along and seek to apply such knowledge by developing your plans and goals with each chapter or each principle.
• Listen to a podcast on the area If you do not like to read or may find it difficult to dedicate the time, maybe a podcast would serve as a better tool for developing your financial literacy. A podcast also allows you to listen and intake information while also performing other mundane tasks within the household like washing dishes and therefore for those who have hectic schedules, this can serve as a useful method of learning.
• Subscribe to a financial blog, website or social media pages Sometimes, reading an entire book could be overwhelming and it may be better to get information in segments, therefore subscribing to a blog or website may prove to be a better method to retain information or seeking guidance and also keep you on track for continuous learning.
• Have discussions Within your network, there may be someone who has had to deal or is engaging with a particular financial transaction and aspect and therefore from their experience they may have developed and gained a better knowledge or understanding as a result. Do not be afraid to reach out, ask for advice or make queries to find out information.
• Use Financial Management Tools For those technologically savvy, the use of apps can also provide advice and guidance for managing your finances as well as aid with organisation and accountability.
• Attend a seminar or enroll in a course Those who have developed a certain level of financial literacy but wish to be more serious and enhance their knowledge may consider taking this step to receive further exposure into new concepts. They can also build connections with experts or those who are similarly seeking to increase their financial literacy to help along the journey to financial wellness.
• Ask Questions, Collect Brochures As we all interact with the financial world, we also come into contact with experts when we are conducting various transactions. Take this opportunity to find out more information about the particular transaction you are engaging in. Ask questions or for clarification on areas you are unsure about.
It is often recommended that a part of financial literacy or beginning a journey to financial wellness also include an assessment of your credit report. A credit report will provide an overview of your credit history and is the means by which most institutions evaluate your requests for extension to credit. You can visit our page main website www.ccbl.info.tt/ to determine how you can obtain your credit report for review.