“Why is it that an individual cannot obtain information on his credit record in Jamaica? If you try to get the details from a company that carries out credit checks, you are informed that access to the information is only available to financial institutions such as banks, credit unions and mortgage houses.

“Therefore you could be making plans for your financial future, but there may be some little thing in your past that you might be unaware of, or which might be wrong, and you don’t have the ability to correct this information.”

Jamaicans are becoming increasingly credit happy. With buying sprees funded by payday loans, credit cards, and hire purchase plans, we really can get it if we really want it. However, as our credit appetite grows, lenders are becoming more cautious about the extra business.

Many consumers may not be aware that when they apply for a loan or credit card, their borrowing history is placed under a microscope. Past details about what they borrowed, and how well they paid it back may have been captured on a database by a credit investigating company. This information can be used to determine if they are successful in getting new loans or not.

Your credit history or credit report is simply a record of your past borrowing transactions, including your repayment pattern. Some things that can negatively affect your credit records include:
– your history of paying bills – obligations paid way past the due dates could signal that you may be careless in paying your debts;
– how much debt you have in relation to your income – this will show if you’re living beyond your means;
– maxed-out credit cards – if the amount owing is too close to the credit limit it may indicate difficulty in paying off the card;
– credit inquiries on your records over a short time – this could indicate that you’re desperately looking for credit options from several loan agencies.

In the United States, having ‘good’ or ‘bad’ credit can literally make or break you financially. Along with your credit report which outlines how you pay your bills and how much debt you’re carrying, there is also a credit scoring system that helps to determine your creditworthiness. By computing all the information in the credit report, a single three-digit number is assigned to each person. This rating, usually called the FICO score, can decide if you are approved to buy a house or car, get a student loan or credit card, or even be allowed to rent a property.

Will Jamaicans ever see a day when our lives are completely controlled by the strength of our credit ratings like what exists in America? I hope not. However, the reality is that decisions about our creditworthiness are currently being made on the strength of reports that we are not able to personally examine.

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I spoke to three local credit reporting companies who all concurred that the documents they produced were not available to be viewed by the subjects of the reports. One company representative explained that they only worked for certain organizations which sent in written requests for information on a person. This credit bureau maintained a database in which relevant borrowing details were kept about individuals. Although banks are restricted in what they can legally reveal about their clients, that fact doesn’t seem to prevent the investigators from being well-informed about our credit backgrounds.

Although the benefits of credit reports for both financial institutions and their customers can be obviously defended, the problem arises when the investigated party has no right to determine the accuracy of the report. As asked by the reader, what if there is an error in the credit report? And even if the details are correct, why shouldn’t individuals be privy to information collected about their own finances?

Looking at the American situation, consumers are entitled and encouraged to request copies of their credit reports from the three major credit bureaus. A 1998 study conducted in the United States by the Public Interest Research Group revealed that 29 per cent of consumer credit reports had mistakes that were serious enough to deny persons access to credit and insurance. Hopefully, these bureaus have significantly reduced reporting errors over the last 10 years, but if there is one person whose financial life is negatively affected by incorrect information, then it is still too many.

As Jamaican consumers, let’s start demanding the right to know about our own credit reports. Next week we’ll look at an initiative to produce a credit rating system that can actually help small business owners gain access to credit.