What is the Credit Data Law?

The new Credit Data Law defines the financial information collected about the customer and the ways in which it is disseminated further, and regulates a way of sharing credit data of the various financial institutions.

The main innovations in the law:

1. The positive information about a person will also be collected alongside the negative information collected earlier.
2. Defines the mechanisms for the customer’s consent to collect information about him and provide it to third parties.
3. Defines the credit database that will be established and managed by the Bank of Israel and will include centralized information about a person from most financial institutions.
4. Defines the manner in which the data in the database is used by credit bureaus that will be able to issue reports on a person for the purpose of examining his conduct and general financial condition, and which will be used by him when applying for credit.and the use of the data by business companies and individuals who will provide service to the customer.

What is a credit database?

A credit database is a new database that will include an extended credit picture for a person and will gather his data from most financial institutions. The establishment of the database was born out of the understanding that the banks’ control in the field of credit to households stems from the vast knowledge they have about their customers, who manage their bank accounts with them. This knowledge enables the bank to accurately analyze the customer’s risk and know whether it is worthwhile to give him a loan. After the establishment of the database, customer information will be open to all credit providers in the economy, who will know how to better price the loans and dramatically improve their ability to compete with the banks.

The law defines four goals for establishing a credit data system:

• Increasing competition in the retail credit market.
• Expanding access to credit.
• Reducing discrimination in the provision of credit and economic gaps.
• Creating an unidentified information base that will be used by the Bank of Israel to carry out its functions.

What information will be included in the credit data system?

The database will include the customer’s credit history over the past three years. What loans he took, the credit facilities he received from the bank and credit card companies, what is his payment history (which indicates his payment ethics), and whether there are assets he pledged against the loans (house, car, securities portfolio, etc.).

The database will not include information on the interest paid by the customer on the various loans, nor will it include information on assets in his possession (except those pledged against a particular loan) or on his income.

At this stage, the database will not include data such as compliance with payments to the Israel Electric Corporation, municipal taxes and other service providers.

Which entities are included in the credit data system?

Financial entities providing

credit – The entities obligated to transfer data to the database are banks, credit card companies, and nonbank credit entities with a credit portfolio of more than 250 One million shekels. Government bodies or public authorities in which various legal proceedings are conducted in connection with outstanding debts, for example: the Official Receiver, the Execution Office, the Bank of Israel’s Limited Accounts Department, the Postal Bank.

Only entities that transfer data will receive data.

Credit bureaus The database will regularly draw data from banks and other credit entities and transfer them to credit bureaus, on the basis of which they will provide a rating to each customer. To this end, the Bank of Israel granted a license to credit bureaus, which only will have access to the database. Today there are three entities: Dun & BradstreetBDI, BDIand guideline.

When a financial institution (banks or nonbank credit entities) wishes to offer loans to a customer, it will contact one of the credit bureaus to obtain information from it (data about the customer and/or his rating).

What is the connection between the system and obtaining credit?

A customer interested in receiving a loan from a financial institution will authorize the particular entity to receive information about him from the database. The financial institution will contact the credit bureaus, an intermediary body that has received the approval of the Bank of Israel, with a request to receive the customer’s rating. The credit bureau will process the data from the database and submit it within seconds to the financial institution along with a rating that it will determine for the customer. The financial institution can use the rating, or analyze the data it received and decide on the terms of the loan.

What are my rights as a customer?

1. Receive a free annual report – Each customer is entitled to receive one free data concentration report each year (between January 1stand December 31st).
   The report can be ordered through the system’s website, through the computerized voice response or through a telephone representative. The report can be produced for 3, 5 or 10 years (with the launch of the database, data from the last three years will be available, a longer history will accumulate later).
   Additional reports can be obtained for a fee, as detailed
   In the price list of services
   .
2. Right to restrict delivery of credit data – a customer can decide which entities to share the information collected about him
3. Right to stop collecting credit data – A customer can decide that the information about him will not be collected and will be permanently deleted from the database.

Is it possible to be removed from the system
?

According to the law, a client can Contact the Bank of Israel and request to be completely removed from the database, except when the customer is in a restricted bank account. Another option is to request to be included in the Bank of Israel’s database, but to demand that the data not be passed on to the credit bureaus. The advantage of the second option is that if the customer changes his mind and decides to join, then his past data will also be included. On the other hand, if he decides to be completely removed from the database, then if he changes his mind, information will be collected about him only from that point in time, which will make it difficult to rank him in the short-medium term.

When a customer is in a limitation period, he will not be able to be deducted from the database. Below is a list of criteria indicating that a customer does not repay or has not previously repaid any financial obligation, following which the customer begins a limitation period.:

1. Issuance of a receivership order.
2. Opening a settlement or settlement procedure with creditors.
3. Declaring bankruptcy.
4. Opening a file by the Execution Office for an initial sum of more than NIS 5,000or opening a number of files with a cumulative amount of more than NIS 4,000.
   Declaration as a limited customer or severely limited customer.
5. Initiation of court proceedings due to a debt to the bank,
6. Debt to a credit card company or debt to another source of information in the amount of more than NIS 10,000.

Who determines to whom credit data is given?

Each customer can limit the provision of credit data included about him in the system to all or some of the credit providers, as he chooses. It is possible to choose whether to limit the provision of information to all entities sweepingly or only to some bodies according to group of affiliation by type of body or individually by body name.

However, when there is credit data on a customer that clearly indicates that the customer is not meeting the repayment of payments, the customer will not be entitled to this request.

What is a proxy in return?

A proxy in return is someone to whom the client has given power of attorney to receive a data concentration report and on its basis to provide him with consulting services in the field of credit. He can be an individual or a company and is allowed to receive information only by contacting a credit bureau. To submit a request for proxy mapping in return

What is credit indication?

The credit indication service is designed to assist the financial entity that provides the credit, At the time of granting credit, decide whether to give credit to the customer. Credit indication is an expression of opinion given by a credit bureau as to whether credit should be given to the customer (yes/no) in light of the data regarding him in the credit data system.

If a customer wishes not to transfer his data to the service bureaus, and there is data that clearly indicates that the customer is not repaying or has not previously repaid any financial obligation, the customer’s credit data will be provided in every credit indication request.
The list of criteria that determine significance for insolvency are:

1. Issuance of a receivership order.
2. Opening a settlement or settlement procedure with creditors.
3. Declaring bankruptcy.
4. Opening a file by the Execution Office for an initial sum of more than NIS 5,000or opening a number of files with a cumulative amount of more than NIS 4,000.
5. Declaration as a limited customer or severely limited customer.
6. Initiation of court proceedings due to a debt to a bank, a debt to a credit card company or a debt to another source of information in the amount of more than NIS 10,000.
7. Sending a warning from the bank following a refusal to honor 5 checks.

What is the Giver Concentration Report?

A data concentration report is the complete report that includes all the credit data of the customer and the entities to which you have given permissions to receive information that you have given in the database.Explanatory video

For more information:

Credit Data System website

Phone number for inquiries and clarifications: *6194