The State Great Khural recently passed a major amendment to Mongolia’s credit information law. As a result, the country now takes a big step toward promoting credit score awareness and improving financial planning for citizens.
Previously, financial institutions collected borrower information in one centralized database. However, they lacked official guidelines on how to use or evaluate this data. Consequently, credit scoring methods varied, and many borrowers had little understanding of their financial standing.
Now, with the updated law, clear regulations are in place. For example, only authorized parties can use credit data—and only to assess creditworthiness. Moreover, the law prohibits any unrelated or unauthorized uses of that data.
In addition, the law introduces approval processes for scoring methodologies. Therefore, lenders will follow standardized, transparent criteria when evaluating borrowers. This shift increases fairness while reducing risk.
Furthermore, the law requires financial institutions to match service fees and product pricing with creditworthiness. As a result, responsible borrowers may receive better terms and rates. On the other hand, risky borrowing behavior may lead to stricter conditions.
Another major benefit is increased public engagement. The law encourages people to actively track their credit scores. With stronger credit score awareness, citizens can catch errors, correct misinformation, and avoid financial trouble.
Notably, the law also promotes financial education. It motivates individuals to pay bills on time and manage loans more carefully. In the long run, these habits could reduce defaults and improve economic stability.
The credit database itself is extensive. It includes data from 12 banks and 436 non-bank financial institutions. Additionally, telecom companies, government-managed funds, and credit cooperatives all contribute.
As of this year, the system holds financial data for 1.6 million citizens and 19,600 enterprises. Clearly, managing this volume of information demands strict oversight and consistent use.
Ultimately, this law represents more than just regulation. It signals a shift toward responsibility and transparency. Most importantly, it empowers citizens. Through stronger credit score awareness, people can take control of their financial futures and build lasting stability.
