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You bounced a check? Someone opened a bailiff's file against you? Until now, these events were unpleasant, however, as of August 1, they will become much less pleasant, since this information will be collected by companies engaged in collating and selling such data.

The credit data law, which allows for the collection of information, will take effect in two weeks. The idea behind the law is to increase competition in the banking sector by providing detailed information on clients. The more accessible information on clients (both positive and negative), the easier it will be to price their risk level properly. Clients with good credit histories will benefit from better rates, while problematic clients will not get credit, or will be forced to pay higher interest rates.

The information collected will come from a number of sources: Israel's official receiver will provide data on bankruptcies, the Bank of Israel will provide data on people whose bank accounts were restricted after bouncing 10 checks; the bailiff's offices will report debts; and banks and credit card companies will provide information on warnings sent for failing to make payment.

In addition, institutions with a turnover of at least NIS 25 million will be able to provide the credit data companies with information. This group includes utilities such as the Israel Electric Corporation, the national phone carrier Bezeq, municipalities, cellular service providers, and retail marketing chains. These entities will be allowed, but not required, to provide data on payment arrears or more than 90 days. The companies will be able to use such information only if they receive data that a client is in arrears on debt payments to three or more institutions.

The law includes regulatory mechanisms slated to prevent the use of every single bounced check or unpaid debt. It states that if a client's bank account is limited, the information will not be transmitted to the credit data companies for 60 days. This allows the client to appeal the decision or reach a compromise with the bank.

According to the law, only events that occur on or after August 1, 2004 will be reported to the credit companies. No prior events will be considered relevant, and the credit companies will not be allowed to take them into consideration.

To date, four companies have expressed interest in operating in the field: Dun and Bradstreet Israel, BDI (Business Data Israel), Menorah Gaon group's CIA, and Sure Credit, which is jointly held by Trendline and Lev Amon.

"The idea behind the law is to identify hardcore debt defaulters, not to catch someone who forgot to make a payment before leaving for military reserve duty," deputy attorney general Tana Spintz, who handled the legislation process for the Justice Ministry, said yesterday. "The law provides several safety margins, because my greatest fear is putting the wrong person or the wrong debt in the database. If it appears there are no errors, we may narrow those margins. We are very interested in the companies launching operations. This is very important, since it will increase competition."