Credit Reporting: Your Questions Answered

What is a credit report?

Your credit report comprises a history of your credit and repayment patterns. To prepare this report, a credit bureau collects this information from any financial institution from which you acquired a loan, or any entity that sells items on credit or hire purchase. Your credit score estimates your ability to meet your financial obligations to an entity that has offered you credit and/or hire-purchase items.

Why is credit reporting being introduced?

Credit reporting has been happening in Barbados for many years. What the new Fair Credit Reporting Act will do is regulate and expand this activity.

From whom is my credit information collected?

Your information will be collected from financial institutions that offer credit, such as commercial banks, finance and trust companies, and credit unions, as well as insurance companies.

It can also be collected from utility companies, companies that offer hire purchase, and other entities such as the Student Revolving Loan Scheme.

A more detailed list can be found in the Act.

What information will be collected about me?

• A credit bureau can collect a wide range of information about you:
• Personal information (e.g. name, date of birth, address)
• The type and amount of a loan or similar type of credit, including hire purchase, that you have with a financial institution or other entity
• All of your outstanding loans as well as potential liabilities, e.g. pending lawsuits       
• The date on which you took out any loans and the terms of those loans, e.g. the principal, interest rates, and repayment schedule    
• Information about any assets that you are using as collateral for a loan or other type of credit
• The current and maximum balance on your loan
• The status of any outstanding loans you have, including when last you made a payment on it
• Any guarantees that you have agreed to provide (i.e. if you are acting as a guarantor for someone else’s loan)
   

Do I have to give permission for my information to be collected and shared?

In some instances, you may be asked to give your consent. However, in other instances, your consent is included in the terms of the credit agreement you are entering into with the credit information provider (e.g. financial institution, utility company, business).

The company can also notify you that your information will be shared by posting a physical notice on their premises or posting a notice on their website. In such cases, doing business with the entity in question after notification is deemed to be consent.

Do I have to give permission for a business to access my credit information?

Yes. However, a business or other entity may determine that your consent for them to access your information is a condition for them offering you credit.

Who will my information be shared with?

Anyone using the credit bureau’s services can receive your credit report, credit score, or other credit information about you.

This includes banks, credit unions, and other financial institutions, as well as companies that offer hire purchase, potential landlords, and potential employers, if the position entails significant financial responsibilities.

Will I be notified when someone accesses my credit information?

No, you will not be notified when someone accesses your information. Remember, however, that entities cannot access your information without your consent.

What happens if I do not give consent for my information to be collected or shared?
If you do not consent for your credit information to be collected by or shared with an entity, that entity has the right not to enter into an agreement with you.

Can I access my credit report?

Yes. Each year, you are entitled to a free copy of your credit report upon request.

What happens if something in my credit report is inaccurate?

If the credit bureau’s information on you is incorrect, you can send a letter requesting that the error be corrected. The credit bureau must, within seven days of receiving your letter:

• Investigate your claim and make any corrections that are necessary
• Advise you that you can report the dispute to the Central Bank of Barbados
   

How can I be certain that the information collected about me will be secure and not misused?

The credit bureau and all credit information providers must have appropriate systems, policies, and procedures in place to protect your information from accidental loss, destruction, or damage. Any malicious breaches of your data privacy carry a penalty of BDS$50,000.

How will a bad report impair my credit prospects?

A business could decline to give you a loan if they consider you to be a bad credit risk.

Will having a good credit score increase my chances of getting a loan or other type of credit?
Companies and other entities can determine whom they or don't do business with, however it is only natural to prefer to do business with customers who have a good track record of meeting their obligations, as these customers are considered lower risk.

How can I get a good credit score?

The best way to build up your credit score is to seek to meet your credit obligations as agreed and speak promptly to your credit provider if you face challenges.

What counts as bad credit? If my bills are due mid-month, but I pay at the end of the same month after payday, does that affect my credit rating?

The Fair Credit Reporting Act does not identify the specific factors that contribute to your credit score. As such, different credit bureaus will determine what activities they factor in determining what is deemed to be bad credit and how heavily they weight them.

Will different issues be weighted differently? Will paying a bill late count the same as not paying a bill?

Different credit bureaus will use different metrics and apply different weights to assess your credit worthiness.

How would something like the moratoria during COVID count in terms of how my creditworthiness is perceived?

Since the moratoria during the COVID-19 pandemic were offered by financial institutions, it is doubtful that a person who accepted the moratoria will have any related non-payments reflected in their credit score.

How long will it take bad credit to cycle off my report?

According to the Fair Credit Reporting Act, credit bureaus can retain information about your credit activity for seven years after you have paid off the loan or other debt.

How often will my credit report be updated?

Credit reporting is an ongoing activity, so each time that you enter into a new credit arrangement or repay an existing loan, it will be reflected in your credit report.

Is everyone starting with a clean slate when the Act goes into effect?

While the Fair Credit Reporting Act was only recently passed, there have been credit bureaus in operation in Barbados for several years. It is therefore likely that these and other bureaus will use the credit information that is currently available on you and build upon that going forward.

Can I be denied a loan, hire purchase, or access to a utility if my credit is bad?

Yes. Companies and other entities can determine with whom they want to do business, and may choose not to do so with someone whom they consider to be a credit risk.

Can a company change the terms and conditions of an existing loan or agreement based on a credit report?

This is unlikely as the terms and conditions of existing agreements would already be set. Your credit report could however impact any potential future agreements you may enter into with the same or another business.