Getting Credit - Credit Information: Casting a wide net to expand financial inclusion

Author: Doing Business
Publication: Doing Business 2017

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A comprehensive credit reporting system that includes credit history data not only from banks but from other institutions— such as trade creditors, leasing and factoring companies, retailers and utilities and microfinance institutions—is critical in the establishment of a well-developed and inclusive financial infrastructure. These additional sources of data can improve the accuracy and scope of the credit reports produced by credit bureaus and credit registries, and generate incentives to improve borrower discipline, particularly in economies with weak legal enforcement mechanisms. Economies that report repayment histories from non-regulated entities tend to include higher numbers of individuals and firms with different income levels and backgrounds in their credit reporting system. By helping more potential borrowers build a credit history, comprehensive credit reporting has the potential to improve the chances and cost of getting credit for millions of low-income individuals and firms.

Main Findings

  • In economies where credit bureaus or registries include data from retailers, utility companies and trade creditors, the average coverage of the credit reporting system tends to be higher than in those where such information is not available.
  • OECD high-income economies and Latin America and the Caribbean have the largest proportion of economies where the main credit reporting service provider distributes data from non-regulated entities.
  • In 50 out of 190 economies measured by Doing Business the main credit reporting service provider distributes data from utility companies in its reports.
  • At least one credit reporting service provider reports repayment history from financing corporations or leasing companies in 110 economies worldwide.