The Central Bank of Kenya (CBK) has issued new directives on the blacklisting of Kenyans with Credit Reference Bureaus (CRBs) under the Credit Information Sharing (CIS) framework.
In a statement issued on Friday, November 11, 2022, CBK accused CRBs and banks of using the CIS framework to deny customers credit.
“Despite the recent improvements in the Credit Information Sharing (CIS) framework, some concerns persist about its use. This relates largely to the use of adverse credit reports issued by Credit Reference Bureaus (CRBs), which are viewed as being used to deny borrowers credit (“blacklisting”). The Central Bank of Kenya (CBK) remains concerned about this perception and is taking concrete actions to address it and strengthen the CIS framework,” said CBK.
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In one of the directives, CBK has mandated all CRBs to include a standard statement at the top of every credit report indicating that a customer’s credit score should not be used as the sole reason by a lender to deny a customer a loan.
“Further, CBK is working with CRBs to improve the quality of the credit reports, and in particular, enhance the robustness of their credit scoring models and align them to best practices,” the statement added.
CBK also said that it is working closely with banks in the ongoing implementation of risk-based credit pricing. In this context, banks are required to consider the credit score of a borrower in addition to other factors in making a lending decision. This approach, according to CBK, would allow borrowers and especially micro, small, and medium-sized enterprises (MSMEs) to access appropriately priced credit.
“CBK urges the public to honour their payment obligations on their credit facilities when they fall due. This will enable them to build a good credit history based on their payment behaviour and thereby obtain loans at better rates. When borrowers experience challenges in repaying their loans, they should proactively engage their lenders. They should also review periodically their credit reports to track their credit scores and verify the accuracy of the reports. We remind the public that they are entitled to one free credit report per year,” added CBK.
The CIS framework was launched in Kenya in 2010 and has developed over time with three CRBs licensed by CBK and was refreshed in 2013 and 2020.
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