Primer on the Credit Information System Act (RA 9510)

What is the policy behind the “Credit Information System Act”? This law, Republic Act No. 9510, is consistent with the need to establish a comprehensive and centralized credit information system for the collection and dissemination of fair and accurate information relevant to, or arising from, credit and credit-related activities of all entities participating in the financial system. A credit information system will directly address the need for reliable credit information concerning the credit standing and track record of borrowers. An efficient credit information system will also enable financial institutions to reduce their over-all credit risk, contributing to a healthier and more stable financial system.

What entity is charged to consolidate the basic credit data, among other functions? The law created the Credit Information Corporation, the primary purpose of which is to receive and consolidate basic credit data, to act as a central registry or central repository of credit information, and to provide access to reliable, standardized information on credit history and financial condition of borrowers. The SEC Chairman shall be the Chairman of the Board of Directors of the Corporation.

What is a “Basic Credit Data”? It refers to positive and negative information provided by a borrower to a submitting entity in connection with the application for and availment of a credit facility and any information on the borrower’s creditworthiness in the possession of the submitting entity and other factual and objective information related or relevant thereto in the submitting entity’s data files or that of other sources of information.

What is a “Credit facility”? It refers to any loan, credit line, guarantee or any other form of financial accommodation from a submitting entity. For purposes of this Act, deposits in banks shall not be considered a credit facility extended by the depositor in favor of the bank.

What is a “Submitting Entity”? It refers to any entity that provides credit facilities such as, but not limited to, banks, quasi-banks, trust entities, investment houses, financing companies, cooperatives, nongovernmental, micro-financing organizations, credit card companies, insurance companies and government lending institutions.

What is “Positive Credit Information”? It refers to information/data concerning the credit performance of a borrower such as, but not limited to, information on timely repayments or non-delinquency.

What is “Negative Credit Information”? It refers to information/data concerning the poor credit performance of borrowers such as, but not limited to, defaults on loans, adverse court judgments relating to debts and reports on bankruptcy, insolvency, petitions or orders on suspension of payments and corporate rehabilitation.

What happens to negative information? The negative information on the borrower as contained in the credit history files of borrowers should stay in the database of the Corporation unless sooner corrected, for not more than 3 years from and after the date when the negative credit information was rectified through payment or liquidation of the debt, or through settlement of debts through compromise agreements or court decisions that exculpate the borrower from liability. Negative information shall be corrected and updated within 15 days from the time of payment, liquidation or settlement of debts.

How about bank deposits/client funds? In the absence of a written waiver duly accomplished by the borrower, basic credit data shall exclude confidential information on bank deposits and/or clients funds under the following laws:

  1. Republic Act No. 1405 (Law on Secrecy of Bank Deposits)
  2. Republic Act No. 6426 (The Foreign Currency Deposit Act)
  3. Republic Act No. 8791 (The General Banking Law of 2000)
  4. Republic Act No. 9160 (Anti-Money Laundering Law)

RA 9510 does not impair the secrecy of bank deposits and/or client funds and investments in government securities or funds, as provided under the laws enumerated above.

Who are allowed to access the Basic Credit Data? The Corporation shall be authorized to release and disclose consolidated basic credit data only to certain entities. Basic Credit Data released to Accessing Entities shall be limited to those pertaining to existing Borrowers or Borrowers with pending credit applications. Credit information shall not be released to entities other than those enumerated below, except upon order of the court. The entities authorized to access the credit information are the following:

1. Accessing Entities. An “accessing entity” refers to any submitting entity or any other entity authorized by the Corporation to access basic credit data from the Corporation. Accessing Entities shall hold strictly confidential any credit information they receive from the Corporation.

2. Special Accessing Entities. A “Special Accessing Entities” is a duly accredited private corporation engaged primarily in the business of providing credit reports, ratings and other similar credit information products and services. They are subject to the following requirements, among others:

  • Special Accessing Entities shall be accredited by the Corporation in accordance with such standards and rules as the SEC in coordination with the relevant government agencies, may prescribe.
  • They shall be entitled access to the Corporation’s pool of consolidated basic credit data, subject to the restrictions provided by the law and related implementing rules and regulations.
  • They are prohibited from releasing basic credit data received from the Corporation or credit reports and credit ratings derived from the basic credit data received from the Corporation, to non-accessing entities unless the written consent or authorization has been obtained from the Borrower. However, in case the borrower is a local government unit (LGU) or its subsidiary or affiliate, the special accessing entity may release credit information on the LGU, its subsidiary or affiliate upon written request and payment of reasonable fees by a constituent of the concerned LGU.

3. Outsource Entities. An “outsource entity” refers to any accredited third party provider to whom the Corporation may outsource the processing and consolidation of basic credit data pertaining to a borrower or issuer of debt or convertible securities under such qualifications, criteria and strict confidentiality guidelines that the Corporation shall prescribe and duly publish. Outsource Entities, which may process and consolidate basic credit data, are absolutely prohibited from releasing such data received from the Corporation other than to the Corporation itself.

4. Borrowers. A “borrower” is a natural or juridical person, including any local government unit (LGU), its subsidiaries and affiliates, that applies for and/or avails of a credit facility.

What about a Non-Accessing Entity? A “Non-Accessing Entity” refers to an entity other than a Submitting Entity, Special Accessing Entity or Borrower that is authorized by the Corporation to access credit information from a Special Accessing Entity. While a Non-Accessing Entity is not among the enumerated entities authorized to access consolidated Basic Credit Data under the third paragraph of Section 6, its definition (Section 3) and its obligation to observe the confidentiality of information (first paragraph of Section 6) indicate that it is allowed  to access relevant information.

What are the basic rights of the Borrower?

1. The borrower has the right to know the causes of refusal of the application for credit facilities or services from a financial institution that uses basic credit data as basis or ground for such a refusal.

2. The borrower, for a reasonable fee, shall have, as a matter of right, ready and immediate access to the credit information pertinent to the borrower. In case of erroneous, incomplete or misleading credit information, the subject borrower shall have the right to dispute the erroneous, incomplete, outdated or misleading credit information before the Corporation.

3. Confidentiality of credit information. The Corporation and other parties shall hold the credit information under strict confidentiality and shall use the same only for the declared purpose of establishing the creditworthiness of the borrower. The accreditation of an accessing entity, a special entity and/or an outsource entity which violates the confidentiality of, or which misuses, the credit information accessed from the Corporation, may be suspended or revoked, in addition to the possible criminal liability of violators.

What is “Credit Rating”? It is an opinion regarding the creditworthiness of a borrower or of an issuer of debt security, using an established and defined ranking system.

What is “Credit Report”? It refers to a summary of consolidated and evaluated information on creditworthiness, credit standing, credit capacity, character and general reputation of a borrower.

How shall the Corporation collect information through the newly-created Credit Information System?

1. Banks, quasi-banks, their subsidiaries and affiliates, life insurance companies, credit card companies and other entities that provide credit facilities are required to submit basic credit data and updates thereon on a regular basis to the Corporation.

2. The Corporation may include other credit providers to be subject to compulsory participation. All other entities qualified to be submitting entities may participate subject to their acceptance by the Corporation.

3. Participating submitting entities are required to submit to the Corporation any negative and positive credit information that tends to update and/or correct the credit status of borrowers.

4. The Corporation should regularly collect basic credit data of borrowers at least on a quarterly basis to correct/update the basic credit data of said borrowers.

5. The Corporation may also access credit and other relevant information from government offices, judicial and administrative tribunals, prosecutorial agencies and other related offices, as well as pension plans administered by the government.

What notice is required from the Submitting Entity? Each submitting entity shall notify its borrowers of the former’s obligation to submit basic credit data to the Corporation and the disclosure thereof to the Corporation, subject to the provisions of this law and the implementing rules and regulations.

10 thoughts on “Primer on the Credit Information System Act (RA 9510)

  1. jesus

    You just help me a lot but I needed more information. how can i update the records in CIS which in my case i already settled my credit card debts with citibank since 2004 but up to now they are still reflected in the system. Is there a fee for updating.
    How can I get a copy of of a credit report so I will know if there are other items that stated under my name so i can make an appropriate action. Thank you.

    Reply
    1. Baby

      You can go directly to CIC to check your Credit reports, if there are any incorrect data about you, you can report it to the CIC. If you have credit dealings with Citibank last 2004, your payments history will be seen in their system. The updating of credit data is free.

      Reply
  2. Edgardo T

    Are lending companies included in RA 9510? How do you send information to this bureau regarding a borrower. Is this compulsary for a lending company to join.
    What are the charges and fees and advantages of joining in this credit bureau. Thanks.

    Reply
  3. Rebo

    I appreciate you taking the time to share your insights about your credit. I hope to see more helpful tips like this on your website. More power to you.

    Reply
  4. j

    Does the lending/compny have the rights to pull.out a unit/property with.out the consent of the owner n w.out any legal papers or court order…6months delayed payments (but w the verbal agreement w d mngr) but it has a partial on that range of time(6mnths)..but willing to pay settle all charges penalties ints. For the months delayed…Is it also thier rights to refuse the payment covering d months delayed?
    Please tell me…thank u so mch

    Reply
  5. j

    What is the policy behind the “Credit Information System Act”? This law, Republic Act No. 9510, is consistent with the need to establish a comprehensive and centralize

    What entity is charged to consolidate the basic credit data, among other functions? The law created the Credit Information Corporation, the primary purpose of which is to receive and consolidate basic credit data, to act as a central registry or central repository of credit information, and to provide access to reliable, standardized information on credit history and financial condition of borrowers. The SEC Chairman shall be the Chairman of the Board of Directors of the Corporation.

    What is a “Basic Credit Data”? It refers to positive and negative information provided by a borrower to a submitting entity in connection with the application for and availment of a credit facility and any information on the borrower’s creditworthiness in the possession of thesubmitting entity and other factual and objective information related or relevant thereto in the submitting entity’s data files or that of other sources of information.

    What is a “Credit facility”? It refers to any loan, credit line, guarantee or any other form of financial accommodation from a submitting entity. For purposes of this Act, deposits in banks shall not be considered a credit facility extended by the depositor in favor of the bank.

    What is a “Submitting Entity”? It refers to any entity that provides credit facilities such as, but not limited to, banks, quasi-banks, trust entities, investment houses, financing companies, cooperatives, nongovernmental, micro-financing organizations, credit card companies, insurance companies and government lending institutions.

    What is “Positive Credit Information”? It refers to information/data concerning the credit performance of a borrower such as, but not limited to, information on timely repayments or non-delinquency.

    What is “Negative Credit Information”? It refers to information/data concerning the poor credit performance of borrowers such as, but not limited to, defaults on loans, adverse court judgments relating to debts and reports on bankruptcy, insolvency, petitions or orders on suspension of payments and corporate rehabilitation.

    What happens to negative information? The negative information on the borrower as contained in the credit history files of borrowers should stay in the database of the Corporation unless sooner corrected, for not more than 3 years from and after the date when the negative credit information was rectified through payment or liquidation of the debt, or through settlement of debts through compromise agreements or court decisions that exculpate the borrower from liability. Negative information shall be corrected and updated within 15 days from the time of payment, liquidation or settlement of debts.

    How about bank deposits/client funds? In the absence of a written waiver duly accomplished by the borrower, basic credit data shall exclude confidential information on bank deposits and/or clients funds under the following laws:

    Republic Act No. 1405 (Law on Secrecy of Bank Deposits)Republic Act No. 6426 (The Foreign Currency Deposit Act)Republic Act No. 8791 (The General Banking Law of 2000)Republic Act No. 9160 (Anti-Money Laundering Law)

    RA 9510 does not impair the secrecy of bank deposits and/or client funds and investments in government securities or funds, as provided under the laws enumerated above.

    Who are allowed to access the Basic Credit Data? The Corporation shall be authorized to release and disclose consolidated basic credit data only to certain entities. Basic Credit Data released to Accessing Entities shall be limited to those pertaining to existing Borrowers or Borrowers with pending credit applications. Credit information shall not be released to entities other than those enumerated below, except upon order of the court. The entities authorized to access the credit information are the following:

    1. Accessing Entities. An “accessing entity” refers to any submitting entity or any other entity authorized by the Corporation to access basic credit data from the Corporation. Accessing Entities shall hold strictly confidential any credit information they receive from the Corporation.

    2. Special Accessing Entities. A “Special Accessing Entities” is a duly accredited private corporation engaged primarily in the business of providing credit reports, ratings and other similar credit information products and services. They are subject to the following requirements, among others:

    Special Accessing Entities shall be accredited by the Corporation in accordance with such standards and rules as the SEC in coordination with the relevant government agencies, may prescribe.They shall be entitled access to the Corporation’s pool of consolidated basic credit data, subject to the restrictions provided by the law and related implementing rules and regulations.They are prohibited from releasing basic credit data received from the Corporation or credit reports and credit ratings derived from the basic credit data received from the Corporation, to non-accessing entities unless the written consent or authorization has been obtained from the Borrower. However, in case the borrower is a local government unit (LGU) or its subsidiary or affiliate, the special accessing entity may release credit information on the LGU, its subsidiary or affiliate upon written request and payment of reasonable fees by a constituent of the concerned LGU.

    3. Outsource Entities. An “outsource entity” refers to any accredited third party provider to whom the Corporation may outsource the processing and consolidation of basic credit data pertaining to a borrower or issuer of debt or convertible securities under such qualifications, criteria and strict confidentiality guidelines that the Corporation shall prescribe and duly publish. Outsource Entities, which may process and consolidate basic credit data, are absolutely prohibited from releasing such data received from the Corporation other than to the Corporation itself.

    4. Borrowers. A “borrower” is a natural or juridical person, including any local government unit (LGU), its subsidiaries and affiliates, that applies for and/or avails of a credit facility.

    What about a Non-Accessing Entity? A “Non-Accessing Entity” refers to an entity other than a Submitting Entity, Special Accessing Entity or Borrower that is authorized by the Corporation to access credit information from a Special Accessing Entity. While a Non-Accessing Entity is not among the enumerated entities authorized to access consolidated Basic Credit Data under the third paragraph of Section 6, its definition (Section 3) and its obligation to observe the confidentiality of information (first paragraph of Section 6) indicate that it is allowed  to access relevant information.

    What are the basic rights of the Borrower?

    1. The borrower has the right to know the causes of refusal of the application for credit facilities or services from a financial institution that uses basic credit data as basis or ground for such a refusal.

    2. The borrower, for a reasonable fee, shall have, as a matter of right, ready and immediate access to the credit information pertinent to the borrower. In case of erroneous, incomplete or misleading credit information, the subject borrower shall have the right to dispute the erroneous, incomplete, outdated or misleading credit information before the Corporation.

    3. Confidentiality of credit information. The Corporation and other parties shall hold the credit information under strict confidentiality and shall use the same only for the declared purpose of establishing the creditworthiness of the borrower. The accreditation of an accessing entity, a special entity and/or an outsource entity which violates the confidentiality of, or which misuses, the credit information accessed from the Corporation, may be suspended or revoked, in addition to the possible criminal liability of violators.

    What is “Credit Rating”? It is an opinion regarding the creditworthiness of a borrower or of an issuer of debt security, using an established and defined ranking system.

    What is “Credit Report”? It refers to a summary of consolidated and evaluated information on creditworthiness, credit standing, credit capacity, character and general reputation of a borrower.

    How shall the Corporation collect information through the newly-created Credit Information System?

    1. Banks, quasi-banks, their subsidiaries and affiliates, life insurance companies, credit card companies and other entities that provide credit facilities are required to submit basic credit data and updates thereon on a regular basis to the Corporation.

    2. The Corporation may include other credit providers to be subject to compulsory participation. All other entities qualified to be submitting entities may participate subject to their acceptance by the Corporation.

    3. Participating submitting entities are required to submit to the Corporation any negative and positive credit information that tends to update and/or correct the credit status of borrowers.

    4. The Corporation should regularly collect basic credit data of borrowers at least on a quarterly basis to correct/update the basic credit data of said borrowers.

    5. The Corporation may also access credit and other relevant information from government offices, judicial and administrative tribunals, prosecutorial agencies and other related offices, as well as pension plans administered by the government.

    What notice is required from the Submitting Entity?Each submitting entity shall notify its borrowers of the former’s obligation to submit basic credit data to the Corporation and the disclosure thereof to the Corporation, subject to the provisions of this law and the implementing rules and regulations.

    Related Posts:Usury and Unconscionable Interest RatesThe Truth in Lending Act explainedExcessive and Unconscionable Interest RatesBasics of the Lending Company Regulation Act of 2007 (RA 9474)Liability of a Co-Maker: Distinguished from Guarantor

    Post navigation? Proposed Rule On Mandatory Legal Aid Service For Practicing Lawyers (Bar Matter No. 2012)Changes in the Rules of Procedure on Corporate Rehabilitation: Provisions Applicable to all Proceedings ?

    3 thoughts on “Primer on the Credit Information System Act (RA 9510)”jesusJune 29, 2015 at 3:19 pm

    You just help me a lot but I needed more information. how can i update the records in CIS which in my case i already settled my credit card debts with citibank since 2004 but up to now they are still reflected in the system. Is there a fee for updating.
    How can I get a copy of of a credit report so I will know if there are other items that stated under my name so i can make an appropriate action. Thank you.

    Reply ?

    Edgardo TJuly 6, 2015 at 10:47 am

    Are lending companies included in RA 9510? How do you send information to this bureau regarding a borrower. Is this compulsary for a lending company to join.
    What are the charges and fees and advantages of joining in this credit bureau. Thanks.

    Reply ?

    ReboDecember 8, 2015 at 9:11 pm

    I appreciate you taking the time to share your insights about your credit. I hope to see more helpful tips like this on your website. More power to you.

    Reply ?

    jMarch 5, 2016 at 4:45 pm

    Your comment is awaiting moderation.

    Does the lending/compny have the rights to pull.out a unit/property with.out the consent of the owner n w.out any legal papers or court order…6months delayed payments (but w the verbal agreement w d mngr) but it has a partial on that range of time(6mnths)..but willing to pay settle all charges penalties ints. For the months delayed…Is it also thier rights to refuse the payment covering d months delayed?
    Please tell me…thank u so mch

    Reply ?

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  6. Isang

    Good day every one.. Tanong ko lng po sana kc my cellphone po aq na inaply sa aeon credit last july 2 then nakabayad po aq processing fee and ung down payment. Then after po noon hndi na po aq nakabayd ng monthly q consecutives months. Pero binayaran q po ung ngng interest nya.. Hndi q po intensyon na hnd bayaran kaso bgla po kc aq nwalan ng work kaya hndi po aq nakabayad. Ngaun po ng txt cla na gwa daw cla action na r.a 9510 ano po bang dpt kong gawin? Nttkot po oc aq eh salamat po sa advice

    Reply
  7. Ncg0301

    Hi, can a bank freeze your savings account and payroll account because of unpaid loan 5 yrs ago.?
    I askef for any document to support their action of freezing my accounts. They can’t provide any except they said that i signed a clause allowing bank to do it. What action should i need to do? Since d ako makapagwithdraw sa BPI account ko?
    and sabi ko d ko mababayaran ng buo i can pay the principal ng installment pero walang sagot at 6 days na ngaun freeze padin. 14K+ ang naiwan ko 55+ ang sinisingil nila sa akin. work lang kc ang source of income ko at dependent sakin ang nanay ko which is disabled at tita ko na 78yo for living.

    sana matulungan nyo ako

    Reply
  8. OLIVER

    What are the examples of “basic credit data”? Our bank required us employees to update records of our depositors even to those already “close accounts” to comply RA 9510. Is this correct approach?

    Reply

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