In the fourteen years that Metropol Credit Reference Bureau (CRB) has been in operation as a licensee of the Central Bank of Kenya (CBK), the question of how to get out of CRB has been and continues to be one of the most frequently asked questions. This question comes up in our interactions with borrowers, especially those who have defaults.
Where does the fear of the CRB stem from?
To answer this question, we must look at the history of how Credit Information Sharing (CIS) was introduced in Kenya, the Regulations that have guided its implementation and the evolution of the mechanism to date.
- CRB Regulations, 2008: Under these Regulations, only negative data was submitted to the CRB by Banks and Micro-finance banks (MFBs) which were the only institutions mandated to participate in Credit Information Sharing. This meant that your record only existed in the Bureau if you had defaulted on your loan obligations. Lenders used CRB data to check if a potential borrower was a defaulter which if confirmed resulted in decline of their loan application. These experiences, coupled with the absence of elaborate consumer education programs to sensitize the public on the bureau framework and implications of credit information sharing inadvertently created a negative perception of the CRB which has persisted despite reforms in subsequent CRB Regulations.
- CRB Regulations, 2013: Banks and MFBs were mandated to share full-file credit information (i.e. positive and negative data) with the CRB. This meant that credit information on good borrowers was now also submitted to the CRB and made available to lenders for credit risk assessment. Another highlight under these Regulations was that non-banks (SACCOs, Digital Lenders, MFIs and Trade Institutions) were allowed to participate in credit information sharing subject to CBK approval.
During this period, Metropol embarked on aggressive self-sponsored outreach programs to market CIS to this category of lenders and trade credit providers and successfully on-boarded over 3,500 non-banks to enrich the volume and diversity of data in its data base.
To date, Metropol stands as the CRB with the highest number of diverse data sources which allows for the development of superior decision products.
Lenders rely on Metropol’s CRB products such as credit scores and our variety of credit reports to give them a more comprehensive view of a potential borrower’s risk profile to enable them make better informed lending decisions.
Individual consumers are also able to monitor their credit scores and track performance on their loan obligations with different lenders through Metropol’s consolidated credit reports.
A credit score is a numerical expression of a customer’s creditworthiness and is contained in a credit report. Metropol’s credit scores range from 200-900 with higher scores indicating low credit risk.
Metropol has a unique channel footprint that facilitates access of our CRB products and services across the country through our physical outlets that include more than 200 CBK approved agents and 8 regional offices spread across the country.
These are complimented by our digital channels on USSD, App (Crystobol App available on Google Play store) and web options that cater to different customer preferences.
- CRB Regulations, 2020: These regulations were published in April 2020 at the onset of the COVID-19 pandemic. Among the reforms was that a minimum threshold of Ksh. 1,000 was set for negative information that is submitted to CRBs by lenders. Simply put, data on any defaulted amounts on loans that were below Ksh. 1,000 would no longer be submitted to the Bureau. CRBs were also required to issue first-time CRB Certificates at no charge.
Alongside these Regulations, CBK issued a circular that withdrew approvals granted to Digital Lenders and Credit Only institutions in response to concerns raised by the public over the misuse of the CIS mechanism by these lenders, unethical debt collection practices such as debt shaming, predatory lending and non-existent or poorly established frameworks to address customer complaints.
The CBK later gazetted the Digital Credit Providers (DCPs) Regulations, 2022 to provide for the licensing and oversight of previously unregulated DCPs. So far, CBK has licensed 51 Digital Credit Providers out of 480 applications received.
Risk Based Pricing
CRB Regulations, 2020 also put emphasis on the use of the credit score as a key factor when appraising a customer’s credit application and in the pricing of a credit facility to that customer. This is commonly known as Risk Based Pricing.
Some of the factors that affect the credit score include an individual’s payment history, amount of debt owed, length of credit history and credit mix.
Borrowers are therefore encouraged to build their credit scores in order to attract favourable loan terms and interest rates in the current Risk Based Pricing environment.
Instead of asking us about how to get out of the CRB, ask us about how to improve your Credit Score.
