The long-awaited review of the current credit reference bureau (CRB) rating formula has started.
Central Bank says it has started taking concrete actions to address the current Credit Information Sharing (CIS) framework which President Ruto deemed as punitive to Kenyan borrowers.
In a statement on Thursday, CBK said it is strengthening the CIS framework to ensure Kenyans are not denied loans based on their credit score.
“First, CBK has mandated all Credit Reference Bureaus to include a 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,” CBK said.
The bank is also working with CRBs to align their credit scoring models to best practices for purposes of enhancing the quality of their credit reports.
It added that it is also working closely with banks on risk-based credit pricing to allow borrowers, particularly micro, small and medium-sized enterprises (MSMEs) to access appropriately priced credit.
“In this context, banks are required to consider the credit score of a borrower in addition to other factors in making a lending decision,” CBK said.
CBK called on borrowers to honour their payment obligations to build a good credit history which will enable them to access loans at better rates based on their payment behaviour.
The bank further advised borrowers to engage their lenders should they encounter challenges in servicing their loans and periodically review their credit score reports to ensure they are accurate.
“We remind the public that they are entitled to one free credit report per year,” CBK said.