The Role Of Utility Data In Your Credit Life

Traditionally, credit reports only contain borrowers' credit information from the formal banking institutions and from here, the borrowers will be evaluated through their banking credit history information. While banking data provides financial payment reporting data for lenders, there is also another scope of information can be considered for a credit-risk assessment.

This other scope of information is utility data. Utility data is payment or credit information based on water, internet, electricity and even telephone subscriptions from providers of "credit-like" services. It acts as alternative reporting data and value-added information for lenders to outline risks of potential borrowers. Information held in the borrowers' credit files plays an instrumental role in the lenders' decisions on granting both the amount and terms of credit that they will offer. Generally, borrowers who are able to showcase a good record of credit files, in terms of timely loan payments through the formal banking institutions, will have a higher chance of getting their credit applications approved by financial institutions as compared to those with irregular records of payment.

However, borrowers with little ("thin file") or no ("null file") credit information inside their credit report will make it difficult for financial institutions to evaluate their credit-worthiness and ability to repay them. In this case, individuals who are not within the credit mainstream often find difficulty to access credit – as financial institutions may only limit their credit-risk assessments through the formal banking data. 

Alternative or non-traditional data, such as utility data, offers one possible solution to issues concerning no credit histories. Borrowers' credibility can now be assessed through their on-going obligations through utilities and telephone bill payments, as these information demonstrates borrowers' willingness and ability to repay credit-like obligations.

The introduction of utility data inside the credit report could also bring many other positive impacts to both lenders and borrowers:

  1. HELPS DETECTS IDENTITY THEFT

    Utility data will enhance and enrich the existing identity information of the borrowers. This will boost the confidence of the system in searching the personal records of the borrowers and ultimately will prevent unwanted circumstance such as identity theft.
     
  2. PREVENTS OR MINIMIZES THE CHANCES OF BECOMING OVEREXTENDED WITH UNMANAGEABLE DEBT

    The inclusion of utility data serves as another indicator for lenders to examine potential borrowers' credit-worthiness. Subsequently, this supplementary data will, to an extent, discipline borrowers financially to repay their credit payments in time and prevent them from being drawn into a debt trap. Additionally, it will also act as a spectacle for borrowers to examine whether or not they have the capacity to apply for new credit facilities – notably, if they have other existing repayment commitments and will be inclined to cut down the number of past-due accounts.

As of earlier this year, the Credit Bureau of AMBD has begun incorporating utility data, to supplement existing banking data, inside the credit report. The utility data serves as a value added information for Credit Bureau's Members – licensed banks, finance companies and Islamic trust funds in Brunei – for credit-risk assessment. The general public is encouraged to check their credit report regularly to ensure that their credit information is accurate and up-to-date. This is to enhance individuals' and companies' confidence that their respective records are clear and correct.

The general public and business entities can obtain their Self-Inquiry Report (SIR) at the Credit Bureau Customer Service Office, Unit 1, Ground Floor, Dar Takaful IBB Utama, Bandar Seri Begawan. For business entities, you can also obtain your business's SIR at Darussalam Enterprise (DARe)'s Business Support Centre, Level 1, Design & Technology Building, Simpang 32-37, Kampong Anggerek Desa, Bandar Seri Begawan.

For more information, please contact the Credit Bureau AMBD at birokredit@ambd.gov.bn

Autoriti Monetari Brunei Darussalam