Credit Education

Credit Report is a detailed report with the picture of your financial behavior (which financial obligations you have, if you repay them consistently, etc.) at the time you request it. Credit report shows data related to financial obligations that you may have defaulted on in the past (e.g. bounced checks, cancellations of loan and card agreements, payment orders, bankruptcies, etc.), but also all your loans from banks and those managed by servicers (loans and credits of all kinds, credit cards, letters of guarantee, etc.), whether you are an individual or you own a business. The Credit Report shows both the loans to you and the loans to third parties for whom you have guaranteed.

As a Credit Bureau, Tiresias collects information from banks and financial institutions as well as other sources (Courts, Land Registry Offices, etc.) and compiles the Credit Report of each individual and each business. The Credit Report is elecronically sent to the credit/financial institution to which the individual or business has applied for financing, following the relevant request from the institution.

Globally, the Credit Report is a tool of great importance to credit and financial institutions, as it provides useful information on the creditworthiness of the prospective borrower. This information, in combination with other information available to the above institutions, lead to more certain decisions regarding loan applications, but also to the provision of loan products with more favorable terms to borrowers who are estimated to be able to repay, as the reduction of defaults results to lower costs for credit and financial institutions.

Every individual or business can request and receive free of charge his/her Credit Report in Tiresias. You can request and receive it by email, in person, or by post/courier at the Public Service Office by completing the relevant application. More information here.

The Credit Report helps you have a better picture of your financial transactions and obligations. By getting your Credit Report in your hands, you have a guide so that you can proceed safely in your relationships with your lenders and use credit only to the extent that you will be able to meet your financial obligations in the future.

A credit score is a three-digit number that rates your credit behavior (from 1 to 600). Lenders use your credit score to estimate, based on probabilities, but also on other information they have, as well as the financing policy they follow, whether you have the ability to repay a new credit (e.g. a mortgage or a credit card), in order to prevent the possibility of you being over indebted in the first place. They also use it so that interest rates and borrowing costs are reduced, through the reduction of bad debts.

The credit score is generated based on all of your data, as they appear in the Tiresias Financial Behavior Data Registries (DFO-MPS-CCS), through statistical processing models, which evaluate your past transaction behavior. It is dynamic and changes every time the data concerning you change. Therefore, the score reflects the assessment of your creditworthiness at the time the credit institution or you request it.

Indicative factors that can affect the credit score are:

• The consistency in the repayment of grants
• Delays in repayment of loans
• The inability to repay financial obligations
• The existence of financial default data (DFO)
• The increase in total grants

Your credit score is evaluated by the credit and financial institutions that request it, after you submit an application for a loan or credit. Institutions take the relevant decision to grant or not grant a loan or credit, in combination with other information they have and the current lending policy they follow. Therefore, the specific each time scoring does not in itself imply the granting or not of a loan or credit.

You can find out your score any time and free of charge along with the main reasons for its formation, by submitting a relevant request to Tiresias (exercise the right of access). More here.

In the international literature, a Credit Bureau or Credit Reference Agency is defined as a legal entity, which processes a creditor's customer information in order to support creditors in the process of evaluating the creditworthiness of their customers. The World Bank defines as a condition for the operation of a Credit Bureau the processing of bank data.

Historically, the first Credit Bureaus appeared in the United States of America after the financial crisis of 1837, while in Europe they appeared a little later. The main purpose of Credit Bureaus was the exchange of information between creditors about the creditworthiness of customers, who received products or services on credit. Over time, the exchange of information through Credit Bureaus covered many sectors of the economy, was computerized and automated. Today, Credit Bureaus operate in most countries worldwide.

In all EU member countries, which have such mechanisms, it has been proved that the systems for exchanging data on the credit behavior of borrowers have contributed substantially to the development and protection of the institution of bank credit, to the reduction of credit risk, the consolidation of financial transactions and the smooth functioning of the financial market.

The function of a Credit Bureau in an economy solves the important problem of information asymmetry between the creditor and the borrower since, as a general rule, the borrower knows his/her financial profile better than the creditor, to whom he/she turns for lending.

Through a Credit Bureau, the creditor obtains a comprehensive credit picture of the creditworthiness of the borrower and can proceed with loans to borrowers, when they estimate that the borrowers have the ability to repay these loans. Thus, the creditor, on the one hand, reduces the credit risk that they manage in their loan portfolio and, on the other hand, they protect the borrower from a loan that he/she will not be able to pay.

Therefore, at the macroeconomic level, over-leveraging of the private sector is avoided.

Generally, Credit Bureaus, as Data Exchange Systems, have been proved to play a key role in the development of the infrastructure of the financial system and, consequently, the economy of a country, and that is why they are one of the three main pillars of an efficient economic system, contributing to the financial stability of a country.

It is noted that the information in the Registries of a Credit Bureau are of an auxiliary nature for the creditor and do not oblige them to carry out or not a transaction. They help them though better document any decision they take.

However, Credit Bureaus do not help creditors only. Through the knowledge they provide to borrowers about their financial picture and creditworthiness, they help them borrow responsibly. That is, to borrow, based on their real obligations, in order to be able to repay them consistently and, by extension, to maintain a healthy financial profile, avoiding possible future problems.