Elements of a Robust Credit-Reporting System

Good practices of a robust credit-reporting system are presented in this section to provide broad guidance on issues to consider in establishing a new credit-reporting system and in identifying areas for the improvement in, or the assessing of, an existing credit-reporting system. This section describes several fundamental elements with respect to the structure of a sound credit-reporting system. It is not a comprehensive and complete illustration but a general guideline. The appropriate design of the system in any particular economy may largely vary by its size, the level of penetration of financial services, the degree of competition, and the legal framework. The implementation of Basel II may also affect the design and operation of the systems (see section 10.3.3). Providers and Users of Credit Data

Typically, in a credit-reporting system, the major credit information providers and users include both financial firms and several categories of non-financial firms:

• Commercial banks and other regulated financial institutions

• Non-bank financial intermediaries

• Credit card issuers, insurance firms, automobile finance companies, and mortgage lenders and guarantors

• Retailers (appliance retailers and others)

• Firms providing business-to-business credit and trade credit

• Microfinance institutions

Other businesses that provide goods or services on credit (utilities, cell phone pro­viders, agribusiness, etc.)

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