Credit bureaus picking up steam in Thailand
By Jon Fernquest
Thailand's National Credit Bureau (NCB)
is set to start using a new credit scoring system
early next year. NCB invested 20 million baht in the new system.
A new Credit Information Business Act came into effect on February 14. The new law gives authority to NCB to set up a credit-scoring system for borrowers in Thailand.
Most financial institutions in Thailand currently use their own credit scoring system to check the credit worthiness of potential borrowers that make loan applications.
NCB's database is a centralised national system for collecting credit information unlike the systems currently used by individual companies. Eventually, NCB should have both more information and more complete information about potential borrowers. NCB collects several different types of information:
Credit information recorded at the NCB is classified into five segments: credit cards, personal loan, hire-purchase loan, mortgage loans and commercial loan and others. Credit card loans account for the largest segment of the NCB's database at 30%, followed by personal loans, hire-purchase loans and mortgage loans at 10% each.
Ideally, individuals planning to take out loans in the future should check the information in the NCB database regularly to make sure it is accurate. Both lenders and borrowers are starting to use the NCB credit scoring system more:
NCB recorded data transactions for 59 million accounts in the first half of the year, of which 53 million are for individuals. The company's databases recorded an average of 12,000 credit inquiries per month in the first half, an increase of 4,600 from the same period last year.
Mr Niwat said the increase in transactions reflected three factors: increased demand for credit, higher rates of loan rejections by lenders and increased awareness of the NCB and its services.
NCB's new credit scoring system has been borrowed from the United States.
Potential borrowers are classified with credit scores ranging from 300 to 900 points. A score below 700 is considered negative. Over 50% of the 15 million Thai borrowers currently listed in NCB's database would score over 700 points. For comparison, risky sub-prime mortgage borrowers in the US sould score around 620 points under the new system.
Credit risk overall has improved significantly in Thailand since the 1997 economic crisis. Non-performing loans in the banking system now hover at around 6% to 7% of total loans.
Read a previous Bangkok Post article during the NLA debate in parliament over the Credit Information Business Act last year.
(Source: Bangkok Post, business, 24-07-08, page B2, SOMRUEDI BANCHONGDUANG, temp-link)
Vocabulary:
credit risk
- the risk of loss due to a debtor's non-payment of a loan (See Wikipedia)
ความเสี่ยงในการเป็นหนี้สูญ นั่นคือ
ความเสี่ยงที่ผู้ให้กู้จะไม่ได้เงินกู้คืนจากลูกหนี้
creditworthiness
- the opposite of credit risk, the less risky a borrower is, the more
creditworthy they are มีเครดิตดี หมายถึง
มีความน่าเชื่อถือหรือมีประวัติในการใช้หนี้เิงินกู้ดี
a credit score
- a number calculated from a person's credit files that measures their
creditworthiness, how likely they are to pay back money they borrow,
used by banks and other financial institutions to make loan decisions
(See Wikipedia on credit
score)
การจัดลำดับความน่าเชื่อถือในการใช้หนี้คืนของลูกหนี้แต่ละราย
a credit bureau,
a credit reference agency - a company that collects credit
information on individual consumers to help lenders assess their credit
worthiness, the ability to pay back a loan, this can affect the
interest rate and other terms of a loan (See Wikipedia on credit
bureau)
a credit rating agency - a company that rates the credit of corporate debt (See Wikipedia) หน่วยงานจัดอันดับเครดิต หรือความน่าเชื่อถือในการชำระหนี้ของลูกหนี้
National Credit
Bureau (NCB)
- Thailand's national credit bureau established by law
ศูนย์ข้อมูลบัตรเครดิตแห่งชาติ
financial institutions - a wide term that many
different kinds of companies including banks, trust companies, credit
unions, and othercompanies that lend money, hold money, and invest
money สถาบันการเงิน
credit inquiries - when individuals ask a
credit bureau about the credit history and score of an individual or
business การตรวจสอบสถานะเครติดของบุคคลหรือนิติบุคคล
loan rejections - when the bank decides not
to give you a loan การปฏิเสธคำขอกู้
sub-prime mortgage
borrowers -
higher risk borrowers who were given loans during the housing boom that
preceded the current Subprime Crisis in the US (See Wikipedia on Subprime
Mortgage Crisis
and Subprime lending)
ลูกหนี้เงินกู้ที่ไม่สามารถชำระเงินกู้คืนได้ทำให้เกิดภาวะซับไพรมหรือผลกระทบทางเศรษฐกิจการการขาดการชำระเงินกู้ของลูกหนี้
ซึ่งกำลังเิกิดขึ้นในสหรัฐอเมริกา
ทำให้เศรษฐกิจของประเทศได้รับความเสียหายมากเนื่องจากสถาบันการเงินขาดเงินหมุนเวียน