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The bureaus are responsible for managing the databases in order to bring transparency to the relationship between creditor and borrower. Included in this process are activities such as collecting and storing information, analyzing the data to help make credit decisions and making access available to third parties authorized by law. In today's context, where transactions take place in seconds, making this credit information available provides security for all those involved in the market: credit grantors, borrowers and the economy.

Those who offer credit need to know the borrower's payment behavior. Those seeking credit can use this information - the credit score, for example - to negotiate lower interest rates and better payment conditions. A healthy dynamic, therefore, which has been strengthened by the change in the rules of the Positive Registry, whose new model is now in force. The automatic inclusion of individuals and companies will enable more consumers and businesses to access loans and financing.

There are, however, harmful credit practices that can disrupt this healthy credit dynamic, which has been regulated not only by the CP law as well as the Consumer Defense Code (CDC) and the General Data Protection Law (LGPD), which will come into force in August 2020.

Restriction on the use of information: Restricting the use of relevant financial information for credit analysis is one of the practices that harms credit, creating distorted credit analysis. Adequate risk analysis, taking into account the information in the databases maintained by the bureaus, can help those offering the credit to know whether the borrower will be able to honor the payment. As a consequence of this restriction, the risk of the borrower defaulting is high, harming both the creditor and the defaulting payer, paving the way for the borrower to become over-indebted.

Limited information recording: Any limitation on the recording of information for the purposes of analyzing the granting of credit also harms the market because it creates asymmetry of information and biased credit analysis which can harm the creditor with the risk of receiving and the borrower who can become over-indebted.

Increased costs related to credit information: Increasing the costs related to information relevant to credit analysis is equally harmful and goes against the purpose of sharing. The databases that provide credit analysis perform a function in the public interest. Access to these databases by those authorized by law should be facilitated.

Bureaucratization of the debt negotiation and payment process: When it is difficult to negotiate and pay the debt, with many instances involved, the debtor remains on the credit registry for longer, harming the borrower. Simplifying ways of negotiating and paying debts is democratic and strengthens the economy. Ease creates an incentive for good payment behavior.

Increased costs for the borrower to pay off the debt: The costs of the debt repayment process penalize the borrower. They should only be responsible for paying off the debt. Any additional costs harm the consumer. As the debt gets bigger, repayment can be compromised. When the creditor collects the debt efficiently without penalizing the borrower, credit recovery is encouraged, thus strengthening the relationship between creditor and borrower.

Complex billing and no flexibility: Complex debt collection processes involve several steps to settle the debt. The relationship should be as simple as possible. Facilitating the negotiation process and making payment methods more flexible will speed up the recovery process, strengthen the relationship between creditor and borrower and encourage borrowers to pay off their debts.

Efficient and effective access to credit-related information ensures that the market functions in the best possible way, bringing maturity to the relationship between lender and borrower.

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By: Elias Sfeir President of ANBC & Member of the Climate Council of the City of São Paulo & Certified Advisor