Will ‘Positive Data’ Benefit Brazilian Banks & Borrowers?

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Advocates for “positive data” believe the practice benefits people with good credit histories, but critics cite privacy concerns. // Image: Cafe Credit via Creative Commons.

Regulatory changes under consideration in Brazil could speed the country’s inclusion of “positive data” in consumer credit reporting, which supporters say benefit people with good credit histories by allowing lenders to better assess risk in extending loans. What are the most important trends in Brazil that relate to positive data, and what are the effects on consumers and financial services providers? Is enough being done to protect consumers’ privacy? How big of an effect will such changes have on other industries that sell big-ticket items, such as household appliances and vehicles? Have other countries in Latin America and the Caribbean found the right balance in the debate over how to use and regulate consumer data?

Steve Liston, vice president for Global Government Relations at Equifax, Inc.: “Brazil has had limited success in implementing a positive data registry. With Chile and Costa Rica, Brazil is among a minority in the region where positive credit history data and other credit-relevant data are not readily available to help assess credit risk. This makes it difficult for lenders to adjust interest rates according to the risk a borrower presents and to responsibly offer credit to consumers and business owners who have not had it before, which represents a large proportion of the Brazilian population. According to the World Bank’s General Principles on Credit Reporting, credit reporting systems best promote financial inclusion and financial stability when they include positive data, such as…”

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