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The President's sanction of the new Positive Registry turned two years old in April. In the initial model, created almost a decade ago, a borrower's entry in the database required express authorization. They had to opt in. The current model established automatic membership, guaranteeing the option to opt out. This change brought Brazilian legislation into line with international best practice and has so far increased the number of registered consumers 15-fold.

The analysis of positive information for the purposes of granting credit allows for a better assessment of consumers and companies and thus reduces information asymmetry. Less asymmetry between credit grantors and borrowers means greater precision in credit analysis and, consequently, greater supply and more appropriate interest rates for each borrower profile.

According to the Doing Business 2020 report by World Bank, Positive information has been adopted in various parts of the world with proven results for at least two decades. In the case of Brazil, in just a few months of operation, we can see that the benefits promised by the Cadastro Positivo are already a reality.

A study recently released by the Central Bank evaluates the impact of positive information on the banking spread. ANBC has produced an infographic to make it easier to see the main findings of this survey.

We know that, despite remaining high, the Brazilian spread has been falling for some time, for various reasons. This study showed that part of the drop can be attributed to the sharing of positive information.

The study compared two groups of individuals with similar characteristics who took out personal loans without consignment for the first time at a financial institution in August 2019 or between August and December 2020. In the so-called “control” group, the individuals' positive information was unavailable at the time they took out the credit; in the other group, this information was already available.

The results indicated that consumers with positive information were able to take out credit paying a spread 10.4% lower, on average, than consumers in the control group.

The study classified individuals with positive information according to the variation in credit note (score) caused by the inclusion of this positive information. The conclusion was that, in the group of 25% consumers who had their credit rating re-evaluated the most - the “top 25” of those re-evaluated - the estimated reduction in the spread amounted to 15.9% on average.

Information from the credit bureau sector also showed that 411,000,000 registered individuals migrated from a higher to a lower risk bracket, while 331,000,000 remained in the same bracket and 261,000,000 migrated to a higher risk bracket. On the one hand, the percentage of consumers with overestimated risk, before the use of positive information, indicates untapped market potential. On the other hand, the percentage of consumers with underestimated risk could lead to an increase in the default rate.

In addition to the impact assessments, the study collected information from financial institutions on the use of positive data. According to the Central Bank, half of the financial institutions operating in the consumer credit segment have incorporated this data into their credit analysis process.

Other important indications can be drawn from the study. It is worth highlighting the fact that non-financial companies have been consulting positive information when making decisions. The data collected by the study also indicates that borrowers themselves are paying attention to their credit ratings.

The more popular Positive data and its benefits, the greater the incentive for consumers to seek punctuality in payments or alternatives to renegotiate their debts, boosting the impact already observed and measured by the Central Bank. The effects, however, should go beyond credit market. Sustaining the growth of this market on a more solid basis, with better evaluated interest rates and risks, could serve as a long-term economic boost and as a vector for financial inclusion and consequent social 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