Flawed system makes you default in one place and a good payer in another – 02/14/2020

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The positive registration began to take effect in Brazil just over a month ago and is already affecting the lives of those who need approval to make installment purchases or take out a loan. This is because structural failures in the system can cause the same person to have different credit notes – the so-called score – depending on the bureau, the company that makes the score.

There are four bureaus authorized by the Central Bank to provide this service: Serasa Experian, SPC Brazil, Good view and Quod. Each of them has their own formula for making the note. In addition, each bureau has an agreement with certain store chains. Therefore, the same person who has already owed in a company is seen as default. If she paid everything right in another, she is considered a good payer. The result is different scores for the same customer.

This has caused discontent among customers. In the website Complain here, for example, there are consumers who question why the score in Serasa is falling while in other bureaus the score has increased.

In the four bureaus, the credit score ranges from 0 to 1,000. Notes up to 300 points represent a high risk of defau< from 300 to 700 points, medium risk, and above 700 points the score represents a low risk of default.

Having different grades in each bureau can affect a consumer’s ability to complete a deal. For example: if the person tries to split the purchase of a TV in a store that just hired the bureau in which the consumer has a score lower than the minimum required for credit approval. He will be denied registration, even if he has a higher score in another bureau.

Positive registration still in formation

The president of ANBC (National Association of Credit Bureaus), Elias Sfeir, said that the entry of positive registration data, which gathers information from good payers, is just beginning. For this reason, he says, negative information, that which shows people’s arrears and unpaid debts, still weighs on citizens’ scores.

According to the bureaus, the positive registration will gain weight in the credit note of consumers over time, over the course of the year, because this information is arriving little by little.

In this first stage, which started in November last year, only the information that is in the banks is being transmitted to the bureaus. This second semester begins the second stage, in which the telephone companies will start sending payment information to their consumers. Then, it will be the turn of utility companies, such as electricity, gas and water companies. After that, it will be the retail stage, in which chain stores and supermarkets will inform the credit bureaus of their customers’ payment habits.

“It is a medium-term project. It is not in one year that all data will enter,” said the president of ANBC. According to him, by the end of this year, about 120 million people will be in the positive register, according to estimates by companies in the sector.

For 2021, the projection is that the number of people with credit notes in the country will reach 150 million.

Credit note formula changes

The oldest credit bureaus, such as Serasa and SPC Brasil, with more than half a century of activity, have more information than Boa Vista and Quod, which were created in 2010 and 2017, respectively. Thus, those older debts that have not been paid can appear and erode the citizen’s credit score more in one company than in another.

This is because the creditor who decided to protest a debt may have registered only one bureau and not all four at the same time – even because it represents a cost for those protesting.

Only as more data from the positive register enter, credit notes tend to become more similar between the different scoring systems. This is because the information on the positive record is the same for all bureaus.

“In fact, we recognize that today there are many differences between the scores of the bureaus”, says the SPC Brasil positive registration manager, Vilásio Pereira. According to him, in addition to different data that each company may have from the same person, bureaus have their own scoring systems. “The weight 60 that we give here for some data may have another weight in another bureau”, said the executive.

You can’t just come out of a bureau

Consumers who are not satisfied with their score in a given bureau cannot ask to have their name removed from just one company. If he leaves the positive register, their records will disappear from the other bureaus as well.

The problem of those who ask to remove the name from the positive register – which can be done through the website of any bureau and must be attended to within 48 hours – is that the bureaus will continue to maintain only the negative register, that is, the debt protests unpaid and overdue,

“The scores today are still very much linked to late payments. This will continue to be relevant if other information is not included,” said Boa Vista’s executive business director, Ricardo Thomaziello.

Financial advisers say the consumer can go to the bureau to see which item is weighing on his score.

Companies do not open in detail how they get to the credit note of each CPF, but they can guide the consumer describing which criteria are used and inform if the problem of the low note is related to an unpaid debt, to payment behavior in delay or lack of more positive data.

How to improve the score?

“The positive registration will not miraculously lead to an improvement in the credit score,” says Leila Martins, director of data operations at Serasa Experia. “If the consumer realizes that the score is not good, he can program himself to start improving his payment history,” he said.

Among the tips from industry professionals to achieve a good score, are to regularize or renegotiate arrears; avoid delays in paying bills such as invoices and bills; place accounts on direct debit and avoid using credit or credit card up to the limit of your payment capacity.

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