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CIC Issues Template for Lenders
Lenders must inform borrowers that their personal credit data will be submitted to the Credit Information Corporation (CIC) and borrowers will have to authorize the lenders to make the submission.
This is in compliance with the Credit Information System Act, or Republic Act 9510, requiring lenders such as cooperatives providing credit services, banks, life insurance companies, government financial institutions (GFIs), credit card companies, and other “entities providing credit facilities” to submit to and access from CIC borrowers’ credit information.
According to Section 4 of the circular, co-operatives “shall inform borrowers in writing of its obligation to submit their Basic Credit Data and other credit information to the CIC.” To make it easier and standardized, CIC has drafted a template: “This is to notify you that pursuant with RA 9510 we are mandated to submit your basic credit data . . . as well as regular updates or corrections to the Credit Information Corporation for consolidation and disclosure as may be authorized by the CIC. Your (data) will be shared with other lenders authorized by the CIC . . . for the purpose of establishing your creditworthiness.”
On the other hand, the template for the borrower to authorize the co-op to submit data reads: “I hereby acknowledge and authorize 1) the regular submission and disclosure of my basic credit data as well as updates or corrections; and 2) the sharing of my basic credit data with other lenders . . .”
Co-ops will be required to maintain copies of the letter notification and make them ready for submission to the CIC when required.
Co-ops are also required to educate borrowers “on the importance of maintaining good credit record.”
With co-ops gaining access to the Credit Information System, Loan Officers can easily check a loan applicant’s previous credit activities and help decide whether to approve loans applications or not.
A credit information system will “greatly improve the availability of credit to micro-, small- and medium-scale enterprises, make credit cheaper, and reduce excessive dependence on collaterals to secure loans.”