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How Credit Reporting Contributes to Financial Inclusion

This policy brief discusses the role that credit reporting systems play in financial inclusion and identifies challenges and solutions to address these issues.
The document has been prepared for the International Committee on Credit Reporting chaired by the World Bank and composed by central banks and financial supervisory authorities, international financial institutions and industry associations.

Financial inclusion has become a public policy priority in many countries.  Many policymakers and regulators are introducing measures to advance financial inclusion levels in their jurisdictions and in response private-sector stakeholders are scaling up their efforts to reach unserved or underserved populations.

While of utmost importance, access to and usage of a transaction account is just an initial step in becoming fully financially included. Another important objective of public policies in numerous countries is to enable vast sectors of the population, including vulnerable and otherwise disadvantaged individuals as well as micro and small enterprises (MSEs), to access credit  on reasonable terms and in a responsible manner.

For a number of years, the World Bank Group and the International Committee on Credit Reporting (ICCR)  have been exploring the role that credit reporting plays, or could further play, in improving access to credit. In this policy brief, the ICCR elaborates on how credit reporting can contribute to financial inclusion, focusing specifically on access-to-credit issues for both individuals and MSEs whose credit needs remain unserved or underserved by licensed/regulated financial institutions and/or by other formal lenders that are not financial institutions (e.g. retailers).

Credit reporting service providers don't offer loans or other forms of financing and don't establish the criteria for loan approvals made by financial institutions or other lenders.  Credit reporting systems can contribute to financial inclusion by;

  • Helping individuals and MSEs build their “reputational collateral” by accumulating payment history data and other predictive data sets and making these data available to lenders, credit reporting systems may help lenders to expand markets to include unserved individuals and MSEs
  • Making access to credit sustainable over time
  • Facilitating lenders to price risks more accurately, credit reporting can help lower-risk individuals and MSEs that already have a formal loan in obtaining more affordable and flexible terms (e.g. longer tenors) for subsequent loans
  • Contributing to responsible finance
  • Improving consumer and MSE financial literacy
  • Helping combat fraud
  • Creating a level playing field for small lenders to compete against larger lenders

The objective of this policy brief is to discuss key challenges and possible actions to leverage credit reporting to its fullest potential. 
The brief builds on previous work developed by the ICCR and includes potential actions that would contribute to responsible access to credit such as:

  • Adopt the General Principles for Credit Reporting
  • Establish and adequate oversight framework
  • Ensure that individuals and MSEs can be identified unequivocally and at a reasonable cost by CRSPs
  • Achieve more comprehensive, granular and efficient coverage of CRSPs
  • Enhance thin files
  • Ensure individuals and MSEs aren't exposed to excessive and unmanageable risks through CRS when they enter the financial sector

The report is being issued as a consultation document.
Comments to be provided by any interested party by October 15, 2016. Comments should be sent to