BANKING: How to build a 'good' credit history.
The best way to improve your credit history is also the simplest way -- just pay your instalments on time.
This is what Artemis Bank Information Systems, the consumer credit bureau established in 2009 and owned by the Association of Cyprus Banks, has been tasked to monitor with about 70% of the economically active population of Cyprus on its database.
However, although the banks-members of the Association are the company's shareholders, there is a clear distinction of the roles of Artemis and the banks that supply the information related to individual and corporate clients.
In an interview with the Fianncial Mirror, Achilleas Amvrosiou, General Manager of Artemis Bank Information Systems Ltd., explained that "consumer credit bureaus, such as Artemis, receive information for free, primarily from creditors and public sources in a standardised format and then match, cross-check, and merge such data."
"Once the bureaus analyse and interpret the data in the form of a credit report which constitutes the borrower's profile, they sell it back to the lenders. Historically, this model was applied to consumer reporting but now, increasingly, credit bureaus also include information on small-size loans to companies."
In addition, Amvrosiou said that based on the issuance of the Central Bank's Directive "for the Operation of a System or a Mechanism for the Exchange, Collection and Provision of data between the Authorised Credit Institutions and the credit institutions" Artemis, and Aiantas (the equivalent data exchange mechanism representing Co-ops), together, cover 100% of the banking industry.
Part of the Artemis database is the issuers of dishonoured cheques, aka "bounced cheques". This information is received from the Central Bank of Cyprus' Central Information Registry (CIR).
As regards conducting a "double check" of mortgage holders, Amvrosiou said that "credit history is compiled for both physical persons (individuals) and legal persons (companies, organisations, etc.). A bank participating in Artemis is obliged by the Central Bank Directive to report monthly all their credit facilities along with their status (e.g. performing, non-performing, terminated and legal cases). The data in the Artemis database is purely supportive. Artemis does not make its own evaluations, judgements or any other form of assessment of the information. Evaluation is performed exclusively by the recipient of the information," (ie. the banks).
In the present state of credit crunch, surely, the vast majority of people would have a "poor" credit history, we asked Amvrosiou.
"Credit history of a person can be improved by paying his instalments on time," was the straight-forward answer we got.
The Artemis database is a snapshot of the latest picture of the facilities, independent of their status (performing, non-performing, terminated, lawsuit, court decision).
"From the moment an obligation towards a bank is still active, this information remains in the system indefinitely. When a non-performing facility, lawsuit or court decision is settled by a customer, then this information remains on the database for five years and then it is deleted."
"Since 1st October 2014, all the customers of all banks having a credit facility or an obligation resulting from a past credit facility (lawsuits and court decisions) are listed in our database. We estimate that 70% of the economically active population of Cyprus is on our database," Amvrosiou said.
But despite all the fears and misconceptions about credit history and its abuse by bankers, Amvrosiou said this was a good thing that would be to the consumer's benefit.
"Having a good credit history is positive for an individual. To have a loan within your capabilities, i.e. proportionate to your income and pay the instalments on time, this is very positive," he concluded.
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