The Cyprus Ministry of Finance said the legislative package needed to implement Reform 4 on a digital system for data exchange and credit scoring services has been successfully passed. The measure, part of Cyprus’ Recovery and Resilience Plan, updates the existing framework for sharing credit data so that credit scoring services can be produced using objective information on borrowers’ credit behavior. The score is intended to support, rather than replace, the assessment of applications for credit facilities by licensed credit institutions and other licensed entities. Under the new framework, credit scoring is designed to reflect obligations for which a person is directly responsible as a primary borrower or co-borrower, while obligations where the person acts only as guarantor are excluded from the score. The ministry said the reform is intended to improve credit risk assessment, support responsible borrowing, direct financing toward borrowers with genuine repayment capacity, and reduce credit risk and nonperforming loans. It also emphasized that lending decisions remain solely with the relevant institution based on the full information available, internal policy and the applicable supervisory framework. The legislation was prepared in consultation with the Central Bank of Cyprus, the Office of the Commissioner for Personal Data Protection and other stakeholders, and includes safeguards on personal data protection, data minimization, participant rights and obligations, and tiered access to data.

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