Credit bureaus have helped consumer credit in Nigeria - Popoola

The Managing Director of CRC Credit Bureau, Tunde Popoola has said that the credit bureaus in Nigeria are focusing on incorporating the informal sector in the scope of their activities.

Speaking as a guest on Channels Television's programme, Business Morning, Mr Popoola said the establishment of credit bureaus and commencement of operations by the pioneers is responsible for the confidence with which Nigerian banks now embrace consumer lending.

He said all the commercial banks in Nigeria are using the credit bureau but 'beyond that, we've now moved on to other sectors all the discount houses have joined, the microfinance banks are joining, mortgage banks, leasing companies, all of these are joining now.'

Mr Popoola said what some of the bureaus are doing now is looking for other data beyond data from the banks 'by moving to travel agency business, pharmaceutical businesses, the retailers.'

Credit Bureaus collect information on the credit history of borrowers from different sources (mainly lenders and other providers of goods and services on credit) and generally make them available to credit providers who have been approached for credit facilities by such borrowers.
The information on borrowers is contained in a document called a Credit Report. Thus, Credit Bureaus sell credit reports primarily to lenders who have been approached for credit facilities, and to other persons who are entitled to access credit reports.

Credit Bureaus also assist lenders to appraise the credit worthiness of prospective borrowers by computing and selling to these lenders what is called a Credit Score. A Credit Score is a statistical score that indicates prospective borrower odds of not defaulting. It is a score that indicates borrower creditworthiness relative to other borrowers in the credit bureau database. And it can be particularly useful in making instant credit granting decisions, especially for small consumer loans.

Credit Bureaus are not responsible for the accuracy of the data in Credit Reports and the data forming the basis of a Credit Score, as they rely on data supplied to them by lenders and other creditors. Thus, consumer protestations about the contents of their Credit Reports will typically be directed by the credit bureau on behalf of the borrower to the lender who furnished the information.

In more developed economies, every consumer has a right to a free copy of his Credit Report once every year or when he has been denied credit based on information in his credit report. Some of the Credit Bureaus already operating in Nigeria have stated their readiness to adopt this model of dealing with consumer concerns.