‘Credit scores’ for borrowers on debt database

Borrowers will be given “credit scores” under plans for a new debt database which Finance Minister Michael Noonan hopes will be in place by the end of the year.

Full details of who owes what to banks, credit unions, licensed money lenders and to shops in hire purchase agreements will be recorded on the proposed Central Credit Register (CCR) to be established by the Central Bank.

The Department of Finance has published a consultation paper on the proposals and hopes to introduce the Credit Reporting Bill this autumn to meet demands of the bailout troika.

Credit information will be available on a database which will be accessible to creditors “for the purpose of making more informed lending decisions”.

One of the main functions of the register will be “to process data received from credit information providers in order to generate credit reports and where possible, credit scores”.

The paper says: “Credit scores are designed to give lenders a fast and accurate prediction of the risk involved in granting credit to a borrower.”

The register will also be available to state authorities for the purpose of planning debt policies: “The CCR could serve to enhance the capacity of state bodies in relation to, for example, statistical reporting or research in order to inform policies to combat over-indebtedness,” the paper states.

“However, there would be an onus on any state body to clearly demonstrate how the public good would be fulfilled by their accessing of the CCR.”

Up to now, debt information has been retained by the Credit Bureau of Ireland, made up of member institutions who choose to participate and share information, but some credit unions and money lenders are not members. Under the proposed laws, there will be a mandatory requirement to inform the CCR of all credit granted and lenders who do not do so could face penalties.

The paper says the purpose of placing the register in the Central Bank “is to ensure that there remains public control” over the database, which “will hold a very large volume of private data relating to individuals and entities”.

The publication of the Credit Reporting Bill is likely to cause concern among consumer and civil liberties groups, but the consultation paper says consumers will be protected. People will be entitled to one free search per year of their credit history to “encourage consumers to check their own credit file and ensure the accuracy and completeness of its contents”.

Interested parties have until June 29 to submit observations on the consultation document which is available on the Department of Finance website.

“Following this consultation process, and further drafting and advisory input from the Office of the Attorney General, the minister will seek Government approval to publish the Bill to ensure compliance with the commitment entered into with the Troika,” the department said.