HOME Credit, a Prague-based consumer finance company that helps customers avail of smartphones, appliances and other gadgets through installment, recently formalized its partnership with state-run Credit Information Corporation, with the sharing of its Philippine credit database to CIC now underway.
Home Credit Philippines’ data sharing, which will happen in stages, is in compliance to Republic Act 9510, which requires banks, finance companies and other credit facilities such as utility companies to submit data related to their clients’ credit history to the CIC. HCPH was one of the very first companies to become compliant.
In a simple recognition ceremony held at the CIC office in Makati, Securities and Exchange Commission (SEC) chair Teresita J. Herbosa, who also serves as CIC Ex-Officio Chairperson, underscored the key role that non-bank institutions such as Home Credit play in promoting greater financial inclusion in the country.
“Our work gets easier because of [companies such as] Home Credit Philippines, one of the leading compliant entities submitting their credit database, who from the very start had nothing but the spirit of cooperation and partnership with the CIC,” chair Herbosa said.
“We’re pioneers in the field of credit registry, and Home Credit is a pioneer in terms of the financing business in PH, especially considering the demographics of their borrowers. Many of them are younger people, and these are the ones who we expect will be full-fledged users of our system,” Herbosa added.
Credit Information Corporation (CIC) President and CEO Jaime P. Garchitorena remarked that “Home Credit has a lot to do with the confidence that we have in moving the CIC forward, [since they were] one of the first organizations to engage with us. They have played a huge role in providing alternative methods for giving credit, which gives opportunities to people who are not yet included in the system.”
“The fact that a very successful institution such as Home Credit is willing to engage with us shows that the CIC has a firm place in expanding the realm of credit, not just as a business, but in making credit accessible to anyone,” Garchitorena said.
For its part, HCPH CEO Annica Witschard remarked that “in every country that Home Credit is in, we firmly believe in the importance of having a system in place to promote financial inclusion, and ensure that more and more people are given access to financial tools.”
“CIC’s work in creating a unified credit database will surely be beneficial for everyone, most of all ordinary Filipinos, and we hope that this can develop as quickly as possible, and that the data gathered from all of these sources is as good as possible,” Ms. Witschard added.
As the number of the unbanked or financially excluded remains high, non-bank institutions, with their use of alternative data, a more liberal framework for lending, and more points of access, is seen to have a big role to play in making sure that more Filipinos have access to financial services. According to a recent survey by the Bangko Sentral ng Pilipinas, up to 86% of Filipino households do not have bank accounts, which is often a requirement for many loans.
“All too often, we’ve seen a ‘vicious cycle’ wherein people can’t get a loan because they don’t have a credit score, and they can’t get a credit score because they have never been approved for a loan,” Garchitorena said.
“Non-bank financial institutions can break this cycle, because they can provide credit opportunities for first-time and thin file borrowers, opportunities that might not be available from other bank based lenders. This opens the door to establish a larger credit footprint which in turn is important for a credit score,” he added.
