The law that regulates and allows the operation of credit bureaus in Honduras dates back to 2005 and it has been created to allow an early warning of the credit risk of individuals and ideal entities.
Based on that alert decisions are made before a credit is extended.
Some articles of the "Bylaws for the authorization and operation of the private credit bureaus" have been modified by Resolution GE NO. 1010/07-06-2011, Official Gazette No. 32,535 of June 15th, 2011) recently.
The amendments are done to regulate the authorization and operation of private credit bureaus which are referred as Credit information Companies or Credit Bureaus. Therefore the financial institutions which provide information to credit bureaus about their clients credit´s default have to manage different kind of controls to ensure that the information will not be incorrect or delayed.
The purpose of the credit bureau is to manage information from entities supervised by the CNBS as well as non-supervised and provide additional services to their core business to adequately identify the debtor, its level of debt as well as evaluating the level of its risk.
The credit bureaus are required to retain in their data bases the credit histories, data for personal identification and to evaluate the economic and financial capacity provided, following these rules:
- Disclose credit information for a maximum of 5 years which will be reduced to 3 if the obligation is cancelled;
- Eliminate the credit information of the cancelled obligation after the above mentioned period;
- The elimination of credit history will not apply to off-loans when the balance is equal or more than fifteen thousand dollars and also if the debtor has been convicted of financial crime.
The credit reference service should be provided based on the principles of Reliability, Availability, Quality and Integrity. The bureaus will be responsible for misuse and unauthorized data of the holder of information.
Regarding its incorporation the Credit Bureaus must be established as a fixed capital corporation, indicate its exclusive activity and request the authorization to operate to the CNBS.
The bureaus will be considered auxiliary credit companies, will be under the supervision of the CNBS (must send quarterly activity reports as well as monthly reports) and shall apply the provisions of the Financial System Law.
The bureaus can collect, store, connect, consolidate and process data concerning the bearer of the information in order to issue credit reports or any other necessary information.
The Bureau´s database will consist of credit information and similar information provided to the bureaus under the sole responsibility of the owners, users or individuals or ideal entities.
Before receiving information the bureau must suscribe a contract of information Exchange provided that it establishes the right and obligations of the parties as well as rules of reciprocity.
Bureaus may celebrate contracts directly with public entities that have information of financial risks except the information constitutes commercial or industrial secrecy.
Bureaus may gather information from sources of public access, information that in general is available to the public, and which is not restricted.
All the information gathered by the credit bureaus must contain the source, date and hour of obtaining; must be stored in order to allow the cross reference and shall be processed adequately.
The production data base must be located in the country. CNBS may authorize that the production data base is located in another country which has a legal framework and supervision on this matter but must account and may be verified by CNBS at all times. If this happens the credit bureau must have a magnetic back up which must be conserved by a period of 10 years.
In order to prevent Money laundering and terrorism financing credit bureaus must provide the requested information to users, legal and tax authorities and CNBS.
However the credit bureaus can refuse to provide information if those entities don´t justify their request. Also credit bureaus cannot transfer any credit information or any other to people which is not a user.
Credit bureaus may agree on their provision of services by any means provided that they ensure the accomplishment of security measures; the user or credit bureau will be liable of this information.
The credit bureaus cannot establish policies that block the procurement of information and impose quantitative restrictions to any consult. Credit bureaus may establish fees for their provision of services which must be released to the CNBS and public.
The Credit bureaus are obliged to protect the Constitutional rights of the owner of the information and to provide tender, truthful, accurate, complete as well as current information.
Credit bureaus cannot release data in their credit reports unless they have the written and express consent of its owner.
Data base won´t be object of transaction unless it is in favor of another company dedicated to the same activity and allowed to operate in Honduras. In this case the transaction must be communicated within the five (5) following days of the subscription of the contract entered into the involved parties.
Credit bureaus must adopt the minimum operation conditions and adopt all the security measures to prevent the alteration, disclosure or unauthorized access to data bases and facilities as well as its misuse.
The owners of information, without detriment to the rights conferred by other laws, are entitled to ask for a credit report once a year, that their data is updated and modified if necessary and can also be informed of who obtained credit reports in the last six (6) months.
The diligence of correction of data will be done by the user and must do the modifications immediately and send it to the credit bureau. In case of mistakes by default of the credit bureau it must correct them immediately.
Credit Bureaus are responsible of the protection and security of the data base so as to prevent the misuse of information.
The users´s liability or of those which provide or use improper or fraud information that causes liquidated damages to the owner will be subject to civil and criminal law provisions.
Credit Bureaus will begin activities with the available information and must add the information of every following year till they complete the minimum base of five (5) years of history. Companies dedicated to this activity willhave four (4) months (since the entry into force of the bylaws) to submit to the authorization process. CNBS will publish an official list of the authorized credit bureaus so as to keep the public informed.
The CNBS will resolve the cases that are not covered under the bylaws. The bylaws will be effective as of the date of publication in the La Gaceta Diario Oficial de la República de Honduras and this publication must be communicated to the supervised entities.
These modifications were necessary to ensure the best operation of credit bureaus. It allows more control and tries to prevent from damages for the misuse of information.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
