Moneylender Moneylender Moneylender
The Ministry of Law (MinLaw) has just announced the operations of a credit bureau for moneylenders that will begin on 1 March 2015.
Known as the Moneylenders Credit Bureau (MLCB), its purpose is to help licensed moneylenders assess how creditworthy the borrowers are, as well as to help prevent borrowers from borrowing beyond their capabilities. Going forward, all licensed moneylenders are required to provide details of their loans to borrowers, and also their repayment information to the bureau. The same details can be retrieved by other licensed moneylenders during a credit application process. These borrowers can also access this information.
Without means of knowing if an individual has taken far more loans than he or she can handle, the introduction of this credit bureau tackles the problem of an individual being overstretched by multiple loans from different moneylenders. With this platform, moneylenders can make an informed decision of the creditworthiness of a borrower during the credit evaluation process.
Mr. Billy Lee, founder and executive director of Blessed Grace Social Services has welcomed the introduction of the MLCB. He believes that as the loan information of borrowers become transparent within the moneylending industry, borrowers will be encouraged to better manage their finances, and not to borrow more than they can handle. Moreover, the credit bureau will be used by the MinLaw and the Registry of Moneylenders to better monitor the borrowing and lending activities.
A credit report will cost $0.50 for licensed moneylenders and $1 for borrowers. Information in the report will include:
a) Loan type and tenure, total outstanding principal amount and total payable amount, and
b) Details of all active loans made with licensed moneylenders and the repayment status of each loan.
Mr. Peter Tan, president of the Moneylender’s Association of Singapore opines that the availability of such credit reports not only discourages borrowers from overborrowing, it also helps licensed moneylenders make better assessments during credit applications. This in turn helps licensed moneylenders minimize risks and lower default rates in their business.