tailieunhanh - An Overview of Credit Report/Credit Score Models and a Proposal for Vietnam

Having a national credit database system would help financial institutions (FIs) reduce credit risk and reduce non-recovered bad debts. The government will feel at ease when FIs and the people are protected from bad debts in a sustainably developing and transparent market. On the other hand, borrowers will also receive benefit. Those who have good credit history will be provided with a more favorable interest rate and less requirements, or even without collateral. | VNU Journal of Science: Policy and Management Studies, Vol. 33, No. 2 (2017) 36-45 An Overview of Credit Report/Credit Score Models and a Proposal for Vietnam Le Duc Thinh* VNU International School, Building G7-G8, 144 Xuan Thuy, Cau Giay, Hanoi, Vietnam Received 04 April 2017 Revised 10 June 2017; Accepted 28 June 2017 Abstract: Having a national credit database system would help financial institutions (FIs) reduce credit risk and reduce non-recovered bad debts. The government will feel at ease when FIs and the people are protected from bad debts in a sustainably developing and transparent market. On the other hand, borrowers will also receive benefit. Those who have good credit history will be provided with a more favorable interest rate and less requirements, or even without collateral. In 2014 the Vietnam National Assembly passed the Citizen Identity Law, which requires the government to issue a unique lifetime personal identification number for each citizen (starting 2016). This will play a crucial role in building a national credit database system. In this article we will give an overview of credit report and credit score models, mainly in the United States. Based on that, we draft a detailed proposal for a national credit database system which can be implemented in Vietnam. Keywords: Credit history, Credit report, Credit score, FICO scores. 1. Introduction their customer base is that they cannot collect enough reliable information to make credit granting decision as well as managing credit risk among this large number of customers. Having a national credit database would help FIs reduce credit risk and reduce nonrecovered bad debts. The government will feel at ease when FIs and the people are protected from bad debts in a sustainably developing and transparent market. On the other hand, borrowers will also receive benefit. Those who have good credit history will be provided with a more favorable interest rate with less requirements, or even without .