This archive report was first published on 21 November 2019.
Understanding CRB and Credit Rating ¶
As a borrower, it's essential to know your Credit Reference Bureau (CRB) status and work on improving it. The CRB is a company that collects information on loans issued by lending institutions, creating reports on borrowers' loan history and repayment patterns. Your status can be listed as good or blacklisted, with the latter indicating default or non-payment.
Good credit rating shows compliance in repaying loans, while a blacklist indicates default or non-payment. This information is critical, as lenders consider it before issuing loans, and employers may seek it out before hiring. Even government tenders may check your CRB status.
Accessing Your Credit Report ¶
Fortunately, accessing your credit report is not a difficult task. You can contact one of the three CRBs in Kenya - Metropol Corporation, TransUnion, and Creditinfo - through their offices, websites, or mobile platforms. You can even send an SMS to a USSD code and follow instructions to get your report. Legally, you're entitled to one free check per year.
Improving Your Credit Rating ¶
Once you have your report, you can work on improving your credit rating. The Metropol CRB uses the payment performance index (PPI), metro score, and Q score to determine your rating. The PPI measures compliance in repaying loans, while the metro score looks at the likelihood of defaulting. The Q score evaluates the quality of data provided to lenders.
To get a good credit rating, you need to be prompt in repaying loans, pay in full without fail, and provide honest and consistent information to lenders. By following these tips, you can expect a good credit rating and a wealth of options when borrowing funds.
Best Practices for Borrowing ¶
When borrowing money, it's essential to be smarter about the dos and don'ts. Borrowing to pay day-to-day bills and expenses is a sign of improper management of funds or a gap in income earning ability. This needs to be resolved immediately to avoid falling into an abyss of loans you cannot afford to pay.
Also, avoid falling prey to bad lenders. Look for lenders with the best terms, such as low interest rates and a longer payment period. These terms will make the loan more affordable and give you more time to repay the loan without delays.
By following these best practices and improving your borrowing habits, you can maintain an excellent credit score and avoid the consequences of being listed in the CRB.
