Earlier today, the International Committee on Credit Reporting (ICCR) issued guidance for policymakers on credit reporting and COVID-19. The guidance was a response to requests from central bankers around the world on options for balancing two policy objectives: (1) protecting borrowers from undue harm to their creditworthiness as a consequence of the COVID-19 global pandemic; and, (2) preserving the integrity of a nation’s credit information sharing system to ensure the safety and soundness of a nation’s financial sector.
“This is not a Sophie’s Choice,” said PERC President Dr. Michael Turner. “There are options for achieving both. In the US and UK codes already exist for reporting on loans that have been modified or are in forbearance as a result of a natural disaster, such as a pandemic.”
The guidance from the ICCR encourages private credit bureaus and public credit registries to utilize tools including special codes indicating “paid as agreed” and “deferred” for all credit trade-lines modified by lenders owing to the global coronavirus pandemic. It also enumerates a range of other options including suppression/deletion but cautions against using the latter as a long-term approach due to the harms it can inflict upon the entire financial sector by distorting credit data.
“We commend the ICCR for their thought leadership,” continued Turner. “They have stepped up and delivered desperately needed guidance at exactly the right time. This is a model of collective action by individuals committed to making a difference.”