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i-Score to assess consumers' credit history
Published in Daily News Egypt on 19 - 09 - 2007

CAIRO: As Egypt's first private-sector credit bureau joins forces with banks and commercial lenders to collect information about the country's credit status, the bureau is also making an attempt to lure telecommunication companies into the system.
As the name suggests, i-Score evaluates a person's credit worthiness and maps out potential risk posed by lending money to consumers, which will in turn help mitigate losses due to bad debt.
While around three banks have so far cooperated with the bureau, providing it with corporate and retail credit information as well as financial data, i-Score will not limit its services to banks.
"Telecommunication companies will benefit a lot from employing i-Score techniques, said Mohamed Kafafi, chairman of the board of i-Score. "Through our credit reports, mobile phone companies can efficiently assess a person's credit worthiness and ability to pay back the bill before giving approval for a new phone line. And based on this information, the companies can provide better offers to their trustworthy clients.
In a bid to tempt telecom companies to team up with the bureau, i-Score board members met Tuesday with Egypt's three mobile phone operators, in the presence of Amr Badawi, managing director of National Telecom Regulatory Authority, and Mohamed Abdel Aziz, senior advisor to the governor of the Central Bank of Egypt.
"Most importantly, mobile phone clients will eventually realize that not paying bills on deadlines will result into denial of credit facilities needed when buying a car or a house, for example, explained Mohamed El-Houshi, i-Score's managing director. "Moreover, failure to pay phone bills can [negatively] affect interest rates applied to loans, not to mention a person's credit worthiness.
Aiming to generate consumer demand for credit as well as boost credit and lending operations in banks and financial institutions across the country, i-Score is still in its pilot phases and is not fully operational. It is currently compiling its credit information database from banks and financial institutions.
In 2006, the International Finance Corporation (IFC) - the private sector arm of the World Bank - provided advisory assistance to help start-up i-Score. IFC initially helped i-Score conduct a market assessment and develop a business plan to ensure a sustainable revenue model.
Moreover, IFC assisted i-Score in selecting an international partner to provide the technological platform that facilitates the gathering, processing, and distribution of credit information to banks and other financial institutions.
So far, three banks - namely Banque Misr, Banque Du Caire, and Bank of Alexandria - have helped the bureau collate personal financial data on their clients. The Central Bank of Egypt and the National Bank are next in line.
"By the end of the year, we expect to have data from 11 banks, which constitutes 80-85 percent of the country's entire credit market, said Kafafi. "It is in the best interest of all banks and financial institutions to join in.
i-Score will provide lenders with five-year credit histories for loan applicants with an internationally accredited IT system and top-of-the-line security provisions. Lenders use the bureau's credit scores to determine who qualifies for a loan, at what interest rate, and at what credit limits.
Consumers with bad credit history are subject to paying higher interest rates or could have their loans revoked so as to reduce rate of defaults and to encourage borrowers or debtors to pay their installments on time. Cost of gaining access to these credit reports is LE 12 for individuals and LE 25 for corporations.


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