New Law Allows Moneylenders to Share Borrower Info for Credit Checks
Licensed moneylenders in Singapore have been granted the authority to disclose borrower information to third parties, leading to improved credit checks and enhanced decision-making regarding loans. Amendments to the law, passed on November 22, now permit moneylenders to collaborate with a prescribed list of credit bureaus, expanding their access to vital borrower data.
Credit Checks Explained Changes to the Law for Singapore Licensed Moneylenders
Comprehensive Credit Checks on Borrowers:
Prior limitations under the Moneylenders Act have hindered licensed moneylenders from conducting thorough credit checks on potential borrowers. The inability to obtain credit reports from credit bureaus other than the designated Moneylenders Credit Bureau (MLCB) has created gaps in assessing creditworthiness. However, with the recent changes in the law, moneylenders can now obtain additional information from authorized credit bureaus, enabling them to make more informed decisions when granting loans.
Expanded Data Sharing:
Under the new legislation, licensed moneylenders are authorized to share borrower information not only with credit bureaus but also with trusted third parties engaged in IT support or debt recovery. This expanded data sharing facilitates efficient processing and ensures transparency in financial transactions.
Benefits for Borrowers:
The amendments also prioritize the welfare and protection of loan applicants, borrowers, and sureties. Licensed moneylenders can now share borrower information with prescribed persons who are actively involved in providing assistance related to debt consolidation loans and restructuring plans. By collaborating with social service agencies, the Ministry of Law (MinLaw) aims to optimize the negotiation process, ultimately benefiting borrowers.
Verification of Information:
To maintain accurate records, licensed moneylenders are now empowered to obtain necessary information from public agencies. This measure ensures that the data submitted by loan applicants is thoroughly validated, promoting fairness and reliability in the lending process.
The recent changes to the law have revolutionized the credit check process for moneylenders in Singapore. By leveraging enhanced data sharing capabilities and collaborating with trusted third parties, licensed moneylenders can make more informed lending decisions while safeguarding the interests of loan applicants and borrowers.
As a borrower, there are several important things you should know about the recent changes to the law concerning credit checks for loans from licensed moneylenders in Singapore. Here is a list of what it means for you:
More comprehensive credit checks: With the amendments passed by Parliament, licensed moneylenders will now be able to run more thorough credit checks on loan applicants. This will allow them to obtain a better understanding of an applicant’s creditworthiness and indebtedness before deciding whether to grant a loan.
Disclosure of borrower information: In order to run these more comprehensive credit checks, licensed moneylenders will now be allowed to disclose details of the borrower to third parties such as credit bureaus. This includes sharing the borrower’s identification number, which was previously not allowed under the Moneylenders Act.
Over-borrowing prevention: The purpose of allowing licensed moneylenders to obtain credit reports from credit bureaus is to prevent over-borrowing by individuals who choose to withhold or inaccurately declare their credit information. By allowing licensed moneylenders to obtain a more complete picture of a borrower’s creditworthiness and indebtedness, over-borrowing can be prevented.
Limited disclosure: It is important to note that the extent of the borrower information that can be shared will be limited to what is necessary. In the case of purchasing a credit report from a prescribed credit bureau, for example, the disclosure of the identification number of the loan applicant will be necessary.
Protection of applicants and borrowers: Licensed moneylenders will also be allowed to share borrower information with third parties engaged to provide IT support or to recover debts. However, borrower information can also be shared with any prescribed person “for purposes related to the welfare and protection of applicants, borrowers and sureties.” This means that borrower information will only be disclosed for legitimate purposes that are designed to protect the interests of borrowers and sureties.
Accuracy verification: Finally, under the amendments, licensed moneylenders will be allowed to obtain records from public agencies to verify the accuracy of information submitted by loan applicants. This will help ensure that borrowers are providing accurate and truthful information when applying for a loan.
In summary, the recent changes to the law concerning credit checks for loans from licensed moneylenders in Singapore mean that borrowers can expect more comprehensive credit checks, but with limited disclosure of their personal information. The amendments are designed to prevent over-borrowing and protect borrowers, while also ensuring that loan applicants are providing accurate information.
