The Joint Credit Information Center (JCIC, 金融聯合徵信中心) plans to start in the second quarter to provide personal credit ratings to local peer-to-peer (P2P) lending companies with the consent of consumers, the agency said yesterday as the nation continues to boost inclusive finance.
P2P companies are not members of the JCIC and they do not have access to the agency’s database to check individual credit ratings. To provide loans, the companies have to ask borrowers to retrieve their ratings from the agency.
“The current practice has several disadvantages: First, consumers cannot retrieve and share their credit ratings via the Internet completely and it might take days,” JCIC president Chang Kuo-ming (張國銘) told an online news conference. “Second, P2P companies tend to doubt the accuracy of the data they obtain, as they are worried that some consumers might falsify the ratings to gain a benefit.”
Based on a score range of 201 to 800 compiled by the JCIC, banks or lending companies can decide how to give those with higher scores better loan conditions, such as lower interest rates, the agency said.
Under the agency’s new mechanism of data sharing, once borrowers apply to share their credit ratings with P2P lending companies, the JCIC would help encrypt the data and send them to the lending companies, Chang said.
The P2P companies could then use a private key provided by the agency to decrypt the files, he said.
The process could be completed in two minutes, and the lenders would have the assurance that the credit ratings they see are accurate, Chang said.
“The new mechanism should support healthier growth in P2P lending, as the better the lenders know their clients, the better they can set loan conditions and maintain a sustainable business,” he said.
The sustainable operation of these lending companies could boost inclusive finance, as not every consumer has a good credit profile and can take loans from banks, Chang said.
However, not all P2P lending firms would be allowed to join the mechanism, he said.
Only those that have been operating for more than three years and have had no data leakage incidents in the past three years would qualify, he added.
Companies must have paid-in capital of more NT$100 million (US$3.61 million), or paid-in capital of more than NT$20 million with ISO 27001 certification, and their beneficiaries must not be Chinese, Chang said.
So far, eight P2P companies have expressed an interest in the system and the agency will check their qualifications, he added.
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