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8/7/2019 What is a credit bureau
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Experian Limited 2007. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Limited.Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted workmay be reproduced, modified, or di stributed in any form or manner without the prior written permission of Experian Limited.Confidential and proprietary.
The role of the credit bureau
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2 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Agenda
Win, win - how the UK model has contributed to economic growth
A closer look at how it works
Introduction to the bureau in the UK Data sharing in the UK then & now
How is the data used - credit - fraud - ID checking - staff
checking - other
Regulation - how is it all controlled?
Consumer education
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3 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Early 17th Century traders meeting inLondon coffee shops to share
information on credit standing of local
customers
The Evolution of Data Sharing in theUK
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4 Experian Limited 2007. All rights reserved.Confidential and proprietary.
The great unbanked - cash society - or cheques
Expensive and limited choice
Credit was available to a favoured few - mainly mortgages and HP
Decisions were often made based on personal knowledge of a bankmanager
Mortgages were only sold by building societies
Home ownership was 50.1% (government figures)
Lending decisions took days or even weeks
Everything happened face to face
Before De-regulation
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5 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Most people have a bank account but do not visit their bank
58,000 cash machines
86 machine transactions per second
263 card transactions per second 24/7
Average 1.6 debit cards & 2.3 credit cards
By 2003 > 70% of households are owner occupied
> 7000 mortgages and 300 credit card issuers
Decisions made in minutes, any time, any day, any place
Now
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6 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Opening a bank account 1971
Personal introduction in branch
3 weeks to open
Then
Applying for a credit card 2006
Research on www
Apply on telephone 22.00
Use immediately to shop on line
Applying for a mortgage 1976 Save for 2 years
Require significant deposit
Only 2 types of mortgage
Now
Applying for a mortgage 2001 Research on www
Apply on telephone
3 days to funds
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7 Experian Limited 2007. All rights reserved.Confidential and proprietary.
World Bank Doing Business Reports 2006 & 2007
Good credit
information
Increased chance
of getting credit
Capital moves to best
business ventures
More
information
Increased
productivity
& growth
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8 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Allows lenders to more accurately evaluate risks and improve
portfolio quality
Increases credit volume / improves access to credit
World Bank states the best way to help borrowers is to improve
credit information and make it easier to take and enforce
collateral
So access to credit is a vital part of economic growth
World Bank
Role of Credit Bureaus in FinancialMarkets
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9 Experian Limited 2007. All rights reserved.Confidential and proprietary.
World Bank Doing Business Reports 2006, 2007 &2008
World Bank states the best way to help borrowers is to improvecredit information and make it easier to take and enforcecollateral
Most popular reforms in 2006 were to create or expand credit
bureaux high risk borrowers will not get credit if protection is too strong
Curbs new business start up
more information at http://www.doingbusiness.org/
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10 Experian Limited 2007. All rights reserved.Confidential and proprietary.
UK number 1again!
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11 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Steady and sustained economic growth
28.97 million in employment most since 1971
Up 220,000 this year
31.06m jobs - highest since 1959
Unemployment % is up slightly - but more people to employ
Confidence is relatively high
Some contraction in revolving credit
House prices continue to rise steadily too
Source ONS 13.09.2006
The UK Economy
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12 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Credit Bureau
Credit
Grantor
Credit
Applicant?
N
Performance Data
Information Request
Credit Report
Granting of Credit
Request for Credit
Y
What is a Credit Bureau?
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13 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Independent broker of information
provided by lenders and third parties
Lender accesses credit bureau to check credit history of applicant
Applicant must be notified
EC Data Protection Directive 95/46/EC
Credit bureau is itself regulated
Credit bureau does NOT make any lending decisions
Where does it Fit into theLending Decision?
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Experian Limited 2007. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Limited.Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted workmay be reproduced, modified, or di stributed in any form or manner without the prior written permission of Experian Limited.Confidential and proprietary.
An Introduction to the Experian bureau in the UK
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15 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Created early 1980s Public Data - several thousand clients
Electoral register
Since early 80s
Holds over 1.3bn records > 44m added annually
Updated monthly
County court judgments
Other public data e.g. bankruptcies, Individual Voluntary
Arrangements
Credit data - CAIS closed user group
The Consumer Credit Bureau
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16 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Home shopping
Building Societies Telecomms providers
Credit Card issuers
Finance Houses
high street retailers
Banks
Utilities providers
Industry Wide Data
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17 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Purpose of Sharing Data
Data is shared for the prevention of over-commitment, bad debt, fraud andmoney laundering, and to support debt
recovery and debtor tracing, with theaim of promoting responsible lending.
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18 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Reciprocal - get what you give
2 levels of membership
Default only
Full
Available in raw and summary formats Retained for at least 6 years
> 70% of credit active population
Highly predictive
> 500 members
> 800m records
Closed User Groups
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19 Experian Limited 2007. All rights reserved.Confidential and proprietary.
CAIS
CAIS was launched in 1983
Started as Mail Order default data sharing
Soon moved into general financial Industry default data sharing
Data volumes and clients quickly grew over the next few years
The first CAIS Flags were introduced in 1994
Experian lead industry quality initiatives 1995/6
SCOR established in 1998
First Principles of Reciprocity agreed in 1998
ICO requirements for defaults - issued in 1999
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20 Experian Limited 2007. All rights reserved.Confidential and proprietary.
CAIS 21st Century
First phase Third Party Data requirements from 24th October 2001
CAIS Enhancements introduced in 2004 to support increased currentaccounts sharing
Further CAIS Enhancements in 2006 to support the APACS Behavioural
Credit Card
Sharing Initiative
New CAIS layout summer 2007 enhanced for new product descriptions
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21 Experian Limited 2007. All rights reserved.Confidential and proprietary.
The future
CAIS developments in last 6 months:
Overnight loading of client monthly updates
` Improves data accuracy
` Facilitates faster client alerts
` Helps reduces consumer queries
New company and account types
` Segmentation of CAIS from 25 to 70+ products / sectors
` Allows for improved predictability
` Improves data accuracy
` Compliant descriptions for new data assets
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22 Experian Limited 2007. All rights reserved.Confidential and proprietary.
More data - CAIS
New Credit and Storecard Data
The APACS initiative for the sharing of behavioural data on credit cards is
underway, this involves the sharing of the following fields on all credit card
accounts:
Payment Amount
Previous Statement Balance Number of Cash Advance
Value of Cash Advances
Minimum Payment Indicator
Promotional Rate
Home Credit Lenders The Home Credit Competition Commission has confirmed that home credit
data must be shared with bureaus by June 2008
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23 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Consumer Credit Bureau statistics
Nov 2007 Nov 2003
Electoral Roll 45.5m 44.5m
Rolling Register updates 2.1m N/A
County Court Judgments 4.74m 4.53m
Bankruptcy 258,000 146,000
CAIS 402m 297m
default records 25.8 19m
Credit Application Data 174m 84.4m
Alias/Associations 125m 89.4m
Address Links 319m 146m
CIFAS (Known frauds) 504,000 322,000CML (Council of Mortgage Lenders)100,000 240,000
Total 1051m 686m
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24 Experian Limited 2007. All rights reserved.Confidential and proprietary.
But what does this mean to ourclients?The Credit Bureau
This Solution ticks all the boxes staff satisfaction, customer services andimproving our bottom line. By using Experians data via the web as part of thequalification process we have greatly reduced the amount of work ourunderwriters spend on applications that are subsequently rejected
The Credit Bureau and Delphi for Customer Management
Both this product, an our ongoing relationship with Experian, have provenproductive and successful. A regularly updated view of customers creditcommitments and behaviour is essential to both effective credit riskmanagement and to discharge our duties as responsible lenders
The Credit Bureau, Authenticate and Detect
The use of Experian products has helped reduce the online fraud by 88%,
saving millions of pounds. The system provided by Experian has been extremelypowerful it brings together and automates all the credit risk and fraud elementsand is very flexible
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25 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Data Security
Security is
important to
our clients and
Experian
Security is
important to our
Regulators
Security can
contribute to the
corporate bottom
and top line
Understand the
threats facing your
organization and
how they affect your
businesses
Never take security for granted:
The impacts to your business can be colossal.
Implement a soundsecurity program to
meet the regulatory
provisions and your
customers
expectations
Maximise the
contributions to
your organisation
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26 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Searches (Footprints)
Credit applications - c150m pa
Quotations
ID
Consumer file requests - c2m pa
Links
Names
People Addresses
Derived Intelligence
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27 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Data Protection in practice
CRA clients search databases with consent of data subject
They notify data subjects what data they will get, how they will use itand what data they will supply and how others will use that.
Consumers may request their file for a small charge
File shows all financial data and who has searched, and why.
Only authorised personnel may access consumer data - with theconsent of the data subject
It is monitored and reported
Client use is strictly controlled e.g. use as a marketing source is notpermitted
Breach is a criminal offence
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28 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Varies by purpose and notification
Non credit data
Public
Negative
Default
Full
Raw or scores / subsets only
How is the Bureau Data Used?
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Experian Limited 2007. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Limited.Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted workmay be reproduced, modified, or di stributed in any form or manner without the prior written permission of Experian Limited.Confidential and proprietary.
The regulatory environment
How does it really work?
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30 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Partnership based on mutual benefit
Extensive consultation
Public consultation and expert working groups
Long lead times
Learn from experience
Self regulation
Regulatory Impact Assessments (RIAs)
Avoid unintended consequences
UK Consumer Policy
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31 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Overriding policy of
protecting
individual privacy
Privacy for
privacys sake
Highly prescriptive
regulation and
controls
Paternalistic - theconsumer cannot
protect themselves
Protection of
public interest for
collective good -
fraud, economic
drivers, free
access to goods
and services
Consumer
awareness and
encouragement to
accept personalresponsibility
Liberal - free
choice
BALANCEBALANCE
BALANCEBALANCE
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32 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Data Protection Principles
Fair and lawful processing
Specified and lawful purposes
Adequate, relevant and not excessive
Accurate, and where necessary kept up to date
Not kept for longer than necessary
Rights of data subjects
Security of data
Data transfers outside the EEA
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33 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Started 1999
Cross industry agreement on data sharing
Code of conduct embedded in contracts
Administered by Steering Committee on Reciprocity (SCOR)
Continually updated to support market
Documents available at
http://www.experian.co.uk/corporate/compliance/datasharing/index.html
The Principles of Reciprocity
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34 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Association of Payment and Clearing Services (APACS)
British Bankers Association (BBA)
Consumer Credit Association (CCA) Consumer Credit Trade Association (CCTA)
Council of Mortgage Lenders (CML)
Credit Services Association (CSA)
Finance & Leasing Association (FLA)
Mail Order Traders Association (MOTA)
3 x credit reference agencies
Steering Committee on Reciprocity -Representation
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Experian Limited 2007. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Limited.Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted workmay be reproduced, modified, or di stributed in any form or manner without the prior written permission of Experian Limited.Confidential and proprietary.
Credit reference agencies and the Consumers
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36 Experian Limited 2007. All rights reserved.Confidential and proprietary.
The blacklist
Affected by previous occupants
Red lining
Secrecy - the X files
We decide who gets credit
Credit rejections are held on your report
Some of the Myths
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37 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Your credit report explained
The credit reference agency explained
A guide for consumer advisers:
` Journalists
` MPs
` Clients
` Debt counsellors
`
and anyone whose has a role advising theconsumer
Consumer Literature
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38 Experian Limited 2007. All rights reserved.Confidential and proprietary.
Young people are tomorrows consumers
Times 100 Case Study (www.tt100.biz)
Getting Credit: A Beginners Guide
Young Consumers of the Year
FSA Workplace financial capability project
www.experian.co.uk/learningzone
Financial Education
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Experian Limited 2007. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Limited.Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted workmay be reproduced, modified, or di stributed in any form or manner without the prior written permission of Experian Limited.Confidential and proprietary.
Any Questions?