Credit bureau or credit bureau is a company that collects credit information from various sources, produces credit reports of natural and legal persons, as well as provides various credit risk management services. Several such credit bureaus operate in Latvia, and their field is regulated by the Personal Data Protection Law and the Law on Credit Offices.
The credit bureaus law
Which is directly relevant to this area, has been in force since 1 January 2015 and lays down the operating rules for credit bureaus, the rules on the processing and liability of credit information, the retention periods and the rules for its Issuance. The primary objective of the Credit Information Offices is to offer Latvian credit lenders a specific control mechanism in their area, the ability to assess the solvency or creditworthiness of their potential customers and their overall ability to assume long-term financial obligations and manage their company’s credit risks.
It should be noted that before the development of credit bureaus, lenders themselves had to collect and analyze the solvency of their potential clients. Nowadays, this situation has been solved because they can buy all the necessary information for the creditors, ie to buy credit bureaus.
Credit bureaus collect credit information
As mentioned earlier, credit bureaus collect credit information. Credit information includes all information that may affect the borrower’s creditworthiness, which is, details of current credit obligations, historical credit debts and transactions, discipline of loan payments, namely delays, borrower’s property and income, and others, with the borrower. financial issues. As already mentioned, the credit information consists of current and historical data.
This data is a credit history that can be positive or negative
Positive credit information is made up of timely loan payments, fully settled credit commitments, or even outstanding debt due. Negative credit information, on the other hand, consists of information on outstanding or delayed loan payments.
As we know, negative credit information or credit history is the most common and most important obstacle to obtaining a loan because it increases the financial risk of the lender, given its probability of recurrence. Credit bureau credit information sources are companies, state or local government institutions, as well as individuals who have access to personal data and information about their credit obligations.