Credit is vastly becoming a vital part of Saudi lifestyle and this phenomenon is expected to grow, with the introduction of a credit database that is to be implemented by 2014, according the Saudi Credit Bureau (SIMAH).
“Approval of personal loans in the Kingdom’s banks will soon be based on an individual’s credit rating registered in the Fair Credit Reporting database, which is to be linked with Saudi banks,” Nabil Al-Mubarak, CEO of Saudi Credit Bureau, told Arab News, while pointing to thousands of previously unpaid loans as a primary reason for implementing the credit system.
He also explained that the database is on track in terms of meeting the deadline set for its launching next year. The database will include information that is useful for credit providers and landlords, in viewing tenant’s rent payment history and providing background checks, in cooperation with the Ministry of Housing and Al-Elm Company, a joint-stock company owned by the Private Investment Fund (PIF).
Al-Mubarak cautioned that an unsatisfactory credit rating brought about by the default of payments on credit-based products and services would lead to penalties on an individual’s credit report, including difficulties in participating in automobile and home installment programs and obtaining credit cards.
Last, year, the Saudi Credit Bureau introduced its credit text-messaging service that allows consumers to get their credit rating and seven-part credit report directly to their mobile by dialing #510001.
Al-Mubarak said the mobile service has become beneficial in helping reduce defaults on various credit-based payments. “This trend is why we expect the credit culture in the Kingdom to expand and become more transparent and organized,” he said, citing the example of Saudi Arabia’s usage of credit cards, which did not take off until around 2000.
“Before the introduction of credit cards in the late 1990’s, Saudi Arabia was primarily a cash-based culture. However over the last decade., the use of credit cards has drastically expanded,” Al-Mubarak said.
According to the latest data from HSBC Global Connections, a financial consultancy firm, credit card usage in the Kingdom grew 104 percent from 2003 to 2011, with the number of credit card transactions increasing by 16.7 percent from 34.7 million in 2010 to 40.5 million in 2011. Currently, Saudi Arabia is among the largest credit card markets in the Middle East.
SIMAH sees credit culture growth
