Al Etihad Credit Bureau today announced that it will start to roll out Phase One of the UAE's credit reporting system from July 2013. This first phase will see the credit bureau commence the collection of consumer credit data from a pilot group of UAE financial institutions to improve the transparency of lending. The reports could see consumers that practise good debt management being rewarded with more favourable lending terms.
The announcement came during an Introduction Day held in Dubai today for all UAE financial institutions and telecommunications companies, at which H.E. Younis Al Khoori, Deputy Chairman of Al Etihad Credit Bureau, provided an overview of the key concepts and benefits of the credit bureau and its specific requirements in the UAE. The meeting also outlined credit data submission requirements and implementation timelines.
From July, Al Etihad Credit Bureau will begin collecting information on individuals' credit applications, payment behaviour and debt records from all UAE banks, other financial institutions and telecommunication companies. This will include credit payments over the past two years and records of any defaults over the past five years. Once the data is collected, the credit bureau will provide credit reports on individuals to assist credit providers in the UAE in making faster and more accurate credit decisions, as well as encouraging consumers to practise good debt management.
Speaking from the Introduction Day, H.E. Younis Al Khoori, Deputy Chairman of Al Etihad Credit Bureau, said, "As well as helping lenders make faster and more accurate credit decisions, the information held by the credit bureau will help individuals to understand and improve their credit worthiness, and potentially lower the cost of credit for good borrowers. In fact, the International Finance Corporation (IFC) recently reported that the probability of obtaining a small bank loan for a small business increases from 28% in countries without a credit bureau, to 40% in countries that do have a credit bureau."
Al Etihad Credit Bureau will implement the full UAE credit reporting system in phases, starting with the Consumer Bureau. Phase Two will see the launch of a Commercial Bureau and the inclusion of Telecommunication Companies, as well as the phasing out of bounced cheque reporting. Phase Three will see the introduction of Value Added Services for lenders, while Individual Scores based on historical data will be completed in Phase Four.
H.E. Younis Al Khoori added, "It is important that individuals in the UAE understand what credit reports mean for them, and we will continue communicating the roll-out of each phase to the public over the coming months. Today's event is a key part of preparations for the launch of Al Etihad Credit Bureau's pilot consumer credit reporting system in July, and affirms our commitment to including banks, telecommunications firms and other credit providers in discussions to ensure the smooth development of the UAE's credit reporting system."
Al Etihad Credit Bureau was created in 2012 under Federal Law Number (6) of 2010, regarding Credit Information. The credit bureau is fully owned by the Federal Government and the Board of Directors is chaired by H.E. Obaid Humaid Al Tayer – Minister of State for Financial Affairs.