If you have relatives in the US - you've probably heard about the importance of a credit score. It's the basis for accessing any kind of credit - and the logic is simple: the better your score - the better the deal you get from banks, micro-credit or hire purchase businesses.
And now, for the first time, Belize is introducing a centralized Credit Reporting System. The initiative is being led by the Central Bank - which has hired an international firm called CRIF to spearhead the program.
Governor Kareem Michael says credit reporting should drive down borrowing rates:
Kareem Michael, Governor - Central Bank
"Where comprehensive credit infrastructure exists, the cost of lending decreases, more people gain access to finance and financial inclusion expands. In simple terms, when information about borrowers is reliable and readily available, credit becomes less risky, more affordable and more widely distributed."
"Differentiating between the credit worthiness of clients becomes very difficult when credit reports are lacking. In other words, without a way to distinguish between borrowers, lenders hesitate to extend loans. To compensate, they raise interest rates, ask for excessive collateral and then deny credit altogether. There is a bit of discriminatory lending practice also involved in this. Our credit reporting system addresses this imbalance by providing transparent, standardized credit histories. It helps lenders make better decisions, reduce the cost of borrowing, and opens the door for more Belizeans to participate in the form of financial system."
"With the CRS, even small enterprises can build what is known as reputational collateral, a financial track record that substitutes for physical collateral."
"So it brings more people into the formal financial system, ensuring that credit is available to many. And as credit flows more efficiently through the economy, investment and growth are stimulated."
"Consumer protection is not optional. It is a legal and ethical obligation. That protection extends to empowering consumers themselves. Under the Credit Reporting Act, every individual has the right to access and verify the information that the credit bureau holds about them. Each consumer is entitled to obtain one free credit report every year ensuring transparency and giving consumers the opportunity to understand and correct their financial information if needed."
