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What is the benefit of having a regulated system of credit reporting?
One advantage, according to Sasha Shillingford, General Counsel at Republic Bank Barbados and a member of the working group that advised on the drafting of the Fair Credit Reporting Bill, is that it allows credit bureaus to draw from more sources of information to compile their reports.
“It is a much wider range of information, which can then provide a much more accurate picture of your borrower. And once you have a more accurate picture, what that does is reduce the risk to lenders. And once risk is reduced, it means that lenders may not require as much security or collateral for loans. It also increases the turnaround time for applying for credit.”
In part two of a three-part series on Barbados’ Fair Credit Reporting Act (read part one here), Shillingford explains how credit reporting improves lending and the borrowing experience and offers advice on how people experiencing financial challenges can manage their affairs in a way that could minimise the impact on their credit rating.