WHAT IS CIC AND WHY IT MATTERS TO THE ECONOMY
CIBI Information, Inc. | 09 March 2017
The CIC or Credit Information Corporation was established when Republic Act. No. 9510 or Credit Information Act (CISA) was passed which was strongly implemented by the Securities and Exchange Commission (SEC) in coordination with other relevant government agencies.
It was created for the country to have a comprehensive and centralized credit information system. The Corporation was created to directly address the need for reliable credit information concerning the credit standing and track record of borrowers. The creation of an efficient credit information system will also enable financial institutions to reduce their over-all credit risk, contributing to a healthier and more stable financial system.
The important functions of CIC are:
- To receive and consolidate basic data, the positive and negative information about the borrower’s facility and creditworthiness.
- To acts as a central registry or repository of credit information, and to provide access to reliable, standardized information on credit history and financial condition of borrowers.
- Address the need for a comprehensive, centralized, and reliable credit information system to improve overall availability of MSMEs.
- Provide credit information at the least cost to eligible participants. Ensuring the protection of consumer rights and the existence of fair competition in the industry and reduce overall credit risk which contributes to a healthier and more stable financial system.
The benefits of the credit registry vary based on the different entities that follow:
- To Creditors it provides a quantitative view of a borrower’s credit transactions. It increases the available data in evaluating and processing loan applications and improves credit risk management.
- To Consumers it encourages competition among lenders to offer a wider range of products and services. Promotes responsible borrowing and allows borrowers to correct any erroneous data in their credit record.
- To Regulators it reduces the overall credit risk thereby contributing to a healthier and more stable financial system.
- To the local economy it is beneficial because it provides better opportunities for small and medium entrepreneurs to participate in inclusive growth. These are made up of households and businesses including micro, small, and medium enterprises (MSMEs) rely on credit as their main source of funding; credit allows the consumption or acquisition of tangible assets that provides entrepreneurs with the opportunity to expand their business. This is how credit drives the Philippine economy.
To know more about the CIC, you may visit their website http://www.creditinfo.gov.ph/.