Service overview – KHR Business
The KHR Service is a credit information database operated by Hungarian banks and credit institutions. Banks use the KHR to share their customers’ credit data with one another. They do so to provide one another with information during the credit assessment process in order to facilitate access to loans by debtors with good credit histories, protect customers against the dangers of over-indebtedness, and in general to mitigate the risks involved in lending.
Credit institutions are required to operate the KHR under Act CXXII of 2011. The Act defines the aims of the KHR as follows:
“Data held in the Central Credit Information System are processed to enable more informed judgements on creditworthiness as well as to promote fulfilment of the requirements for responsible lending and the mitigation of credit risk with a view to ensuring the safety of debtors and reference data providers.”
Consequently, by supporting responsible lending, the KHR serves the interests of both customers (“debtors”) and credit institutions (“reference data providers”).
Parties to the Service
Basically, the operations of the KHR involve the following three players:
The KHR Service: The central KHR database is operated by BISZ Zrt., providing access in accordance with legal regulations.
Banks and financial institutions: Institutions engaged in lending or the provision of loan-type products and services are authorised to use the KHR database to make queries and submit data. Such institutions include banks, savings cooperatives, leasing companies, companies specialising in the provision of personal loans, sales finance and housing loans, and other financial enterprises. Institutions such as the National Tax and Customs Administration (NAV), ministries, municipalities, public utility and telecom providers and NGOs are not allowed to subscribe to the Service.
Customers: Individuals and businesses whose customer and credit agreement data (as well as data on events of default and abuse as specified in the KHR Act) are submitted to the KHR by credit institutions.
The KHR holds data on both consumers and business customers. Accordingly, the KHR consists of two parts, referred to as “subsystems”:
the consumer subsystem holds data on individuals,
the business subsystem holds data on businesses.
The KHR holds full records, i.e. it contains positive information (in respect of debtors whose repayments on their debts are in order) as well as negative data (in respect of debtors in default, or abuse).
The business subsystem of the KHR
The business subsystem of the KHR holds data within the scope of the KHR on credit institutions’ business customers. Records in the business subsystem cover the following data categories:
Information on credit agreements and other financing agreements within the scope of the KHR
Information on credit defaults
Information on insolvencies (items queued on bank accounts)
Abuse related to bank card acceptance
The business subsystem of the KHR processes information on data from all open agreements of the entire Hungarian banking sector as well as agreements closed within the limitation period. For the purposes of credit assessment and credit review, banks can access the data on record without customers’ specific consent.
Basic company data on record
In the business subsystem, each customer of any data provider is identified by a reference number derived from its VAT number. The following basic company data are listed:
Name of the business (company name, or the name of the individual for sole traders)
Company registration number
Number of sole traders’ licence
The KHR stores data on credit agreements, late payments, insolvencies and merchant fraud linked to company data.
The customer information on record will remain in the KHR as long as the records contain any credit agreement, insolvency or abuse linked to the customer. Subsequently, the information will be deleted irretrievably.
Register of credit agreements - Business
The database holding credit agreement data on businesses contains full records of both positive and negative data on all open agreements for business loans and similar schemes (as well as on agreements closed within the past 5 years) with credit institutions in Hungary. One business customer may be associated with any number of agreements.
Agreement data on record
The KHR records a number of entries on each agreement. These include:
- Main type of loan product/financing (short-term or long-term, on-balance-sheet or off-balance-sheet from the bank’s perspective)
- Subtype of loan product (loan, credit facility, factoring, lease, various guarantees and other product types)
- Date of the agreement
- Expiry date of the agreement
- Amount and currency of the agreement
- Current status of the agreement (open, closed)
- Amount and currency of principal debt outstanding
- Information on regular repayments (amount and currency of instalments, method of repayment)
- Information on early repayments (dates and amounts of early repayments, amount and currency of principal debt outstanding)
- Late performance status (any current late payments on the agreement)
- Status of the agreement (options: normal status, closed under normal procedures, expired, forced expiry, cancelled, bank guarantee drawn)
- Total amount and currency of non-performing claim (principal, interest and charges)
- Termination date
- Method of termination (options: regular termination, new credit agreement, arrangement, subsequent repayment, successful collection, charge-off)
- Information on whether the bank currently managing the agreement has acquired it from another bank (as part of the sale of receivables, sale of a business or fusion).
Information on the amount and currency of principal debt outstanding and regular repayments is updated in the KHR by all financial institutions on a monthly basis (by the 5th business day of the month following the month concerned), enabling credit assessment to rely on an accurate measure of the customer’s creditworthiness in the light of up-to-date levels of indebtedness.
In addition to the above, the KHR records the bank (and branch) managing each agreement; however, this information serves only to identify the credit institution authorised for maintenance and is not accessible by other banks.
Register of late payments
In addition to credit agreement data, the system records data on late payments without limitation to amounts. In the KHR, an agreement may be associated with any number of late payments. During the term of a given credit agreement, a company may default on its payment obligations up to several times. Obviously, only one of the late payments registered can be outstanding.
The system retains data on late payments related to the agreement for 5 years after closure.
The KHR records the following information on each late payment:
- Date of late payment occurring (due date of overdue debt outstanding)
- Amount and currency of the late payment
- Settlement date
Method by which the late payment was settled (options: by customer, by another person, amended agreement/prolongation, enforcement against collateral)