Borrower's individual rating: Bank of Russia consultation paper
The Bank of Russia offers market participants and the expert community a consultation paper for discussion on the prospects of the application and development of a service for calculating an individual rating of a credit history subject.
The individual rating shall be calculated by credit history bureaus (CHBs) on the basis of their own evaluation methods and information available in the credit history. The individual rating may be provided at the request of an individual, who is the credit history subject, as well as at the request of a current or potential lender. At the same time, CHBs are not obliged to calculate the individual rating.
The Bank of Russia's attention to the individual rating is explained by the following considerations. Credit history bureaus are among the most important infrastructure institutions in the lending market and hold credit histories of the entire economically active population. Amid growing competition in the lending market, abating systemic risks, and improving financial stability, CHB scoring models are becoming particularly relevant and important for the financial system. At the same time, it is necessary to further increase the availability and improve the quality of services provided by CHBs.
Moreover, the Bank of Russia believes that the individual rating can be potentially quite helpful in boosting the financial literacy of the population.
The consultation paper takes into account international experience and presents various options for the development of the individual rating calculation service along with their strengths and weaknesses. The regulator proposes that market participants consider, in particular, such matters as the mandatory provision of an individual rating, the conditions for provision of a rating to an individual, and the need for a qualification assessment of CHBs' rating calculation methodologies or for the creation of a unified individual rating.
The participants of the discussion may send their answers and suggestions to the Bank of Russia until 26 July 2019.