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One of the challenges arising from the pandemic caused by the new coronavirus is to mitigate its impact on the economy and credit, while respecting health and well-being conditions. Thus, numerous emergency financial support measures have already been approved or are in the process of being approved in Brazil and around the world for informal workers, individuals and companies who have lost or had a significant reduction in their sources of income.

Internationally, regulatory agencies and credit market entities recommend the adoption of debt renegotiation policies, postponement of due dates for obligations and flexibility in negotiations between creditors and debtors. This is because by establishing new conditions for settling debts, default is avoided and the needs of both parties are met.

At the same time, the world's leading credit authorities reinforce the importance of the integrity and continuity of credit protection databases, given their critical role in the functioning of the credit system. They recommend that creditors continue to provide the bureaus with default and delinquency information, despite the crisis, given that the continuity of the system is essential for consumers, credit grantors and the economy.

In the view of these organizations, the most effective solution for protecting consumers is to broaden the business loans, It is also essential to maintain the bureaux system, especially for small and medium-sized businesses, and to extend the period for paying off consumer debts. And maintaining the bureau system is essential for any recovery measure, especially as a parameter for any economic reactivation program and aid to debtors.

The International Committee on Credit Reporting (ICCR), an organization of the World Bank, believes that a crisis like the current one brings to the forefront the discussion of how payments lost or delayed as a result of the pandemic can be dealt with in the credit reporting system.

From the ICCR's point of view, regulators of credit reporting systems should consider implementing several measures. Among them, the complete and continuous sharing of credit information, including the reporting of payment data lost due to the crisis, with the necessary safeguards to have a weighted effect on the history and credit score of data subjects. 

The Association of Consumer Credit Information Suppliers (ACCIS), an international organization that brings together 39 credit bureaus, warns that credit rating agencies do not provide credit and therefore cannot suspend payments, as their main role is to contribute to responsible access to credit and financial stability that protects borrowers, creditors and society as a whole.

In the United States, the Board of Governors of the Federal Reserve System (FRB) and other credit industry entities issued an interagency statement showing that this unique situation may pose temporary business disruptions and challenges affecting banks, credit unions, businesses, borrowers and the economy. The document encourages financial institutions to work prudently with borrowers who may not be able to meet their contractual payment obligations due to the effects of the COVID-19. And they consider that proactive actions by institutions to reduce credit risk are in the best interest of institutions, borrowers and the economy.

In Brazil, the National Association of Credit Bureaus (ANBC) and its members have encouraged individuals and companies affected by the crisis to negotiate with their creditors. The sector has also extended the deadline for entering data in the negative register from 10 to 45 days. This measure, active since April 17, is valid for 90 days and was decided in agreement with data providers, such as financial institutions, to open up space for renegotiation between the parties, without penalizing consumers and companies.

Since credit is one of the main pillars of economic recovery, it is imperative that Brazil follows the principle of integrity of the data required for credit risk analysis, promotes interaction between the parties and marks the information on borrowers affected in the context of the pandemic so that they receive a fair assessment in the future. 

Any initiative that limits access to or use of the information needed to assess credit risk will bring uncertainty to credit agents and, as a consequence, a reduction in the volume of resources and unfavorable conditions for granting credit, compromising government initiatives and harming consumers, companies, the economy and the country's well-being.

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