Senator Edgardo J. Angara today lauded the Senates recent enactment of the establishment of a Credit Information Corporation

The greatest benefit of the Credit Corporation is making credit more available, especially to small yet responsible borrowers. Their good track record in paying their obligations will be made known to financial institutions, and will thus make it easier for them to borrow, Angara said.

Angara, Chairman of the Senate Committee on Banks and Financial Institutions, said that a recent meeting on microfinance revealed that there are hundreds of billions of money available for micro-lending, but only P43 billion has actually been lent out.

This is because there is a lack of comprehensive and credible credit-related information. Lenders would have to gather vast amounts of information in order to assess a persons creditworthiness, which is both difficult and costly, he said.

Lenders, as a result are constantly exposed to high credit risk. Borrowers are required to present valuable physical collateral before being considered for credit. And after a long and tedious credit application, borrowers are charged with sky-high interest rates.

Credit becomes costly, if not completely inaccessible. This leaves small borrowers the masses, starting entrepreneurs and small-scale businessmen at the mercy of loan sharks, Angara warned.

The Credit Corporation will gather credit information from financial institutions such as banks, credit card companies, and government lending institutions. It will cover all borrowers, and gather both positive and negative information.

Not only will it lower the cost of credit, and reduce the reliance on physical collateral to secure credit facilities, but it will also give lending institutions access to accurate and reliable credit information to help them manage credit risks better, said Angara.