Israeli Credit Data Usage Surges Amidst Stalled Business Credit Expansion Law
The Bank of Israel released its 2025 annual review of the consumer credit data system, revealing a significant increase in public demand. Over the past year, credit providers generated 6.4 million detailed credit reports, marking a 12% rise compared to 2024. Additionally, requests for credit indicators, which provide quick yes/no answers based on negative structural data, grew to 5.2 million from 4.7 million the previous year. Public awareness and digital accessibility also improved, with over one million views of the personal digital credit report in 2025, up from 852,000 in 2024.
Data from licensed private credit bureaus show that about 80% of the population holds a "good to excellent" credit rating, 10% are rated "fair," and the remaining 10% have "low to very low" ratings. The Bank of Israel emphasized that a large portion of the public can leverage positive payment behavior to negotiate better loan interest rates by comparing offers from competing lenders. By the end of 2025, 65 data sources, including banks, credit card companies, institutional bodies, and government agencies, regularly reported to the system, with four new sources added that year. Sixty credit providers officially use the data, six of which joined in 2025.
A comprehensive Bank of Israel study on the 2019 launch of the credit data system found it reduced interest rate spreads on non-bank car loans by about 0.3 percentage points on average, with reductions exceeding one full percentage point as data quality improved. The study also noted a shift from general pricing based on loan leverage to risk-based pricing tailored to individual borrowers, which correlated with lower default rates.
Despite the consumer system's success, legislation to expand the credit data system to businesses remains stalled amid political disputes. The law, approved last month by the Knesset's Economic Committee, aims to address chronic market failures affecting small and medium-sized enterprises (SMEs), which represent 55% of business output and 60% of employment but only 27% of total credit. Currently, 92.3% of these businesses rely on bank credit, with 83% borrowing from their primary bank, creating a "captive client premium" that inflates financing costs.
The Bank of Israel estimates that establishing a dedicated corporate credit database could save SMEs about 1.5 billion shekels annually in financing costs, calling the reform economically significant. However, the bill faces renewed risk of failure in the Knesset plenary due to political conflicts. Last week, the coalition removed the bill from the agenda after the United Torah Judaism faction refused to support government legislation, and the opposition pledged to vote against it. The bill is being reconsidered today, but its passage remains uncertain amid ongoing threats from United Torah Judaism. The government has only a few days left to pass the law in three readings before the Knesset dissolves for the summer recess on July 19.
