Following the global financial crisis of 2008, the one word that stood out for me was personal credit scores. The narrative around them at the time was how many people's credit scores had been ruined in no way of their making. But before that, there was the issue of sub-prime mortgages. These were loans that were given to people whose risk profile and credit scores were not deemed to be sufficient enough for such loans and mortgages. This was something that was prevalent in the United States.
In the rest of the world, credit reports have been in use for quite a long time. The simplest explanation of what a credit score is that it is a three-digit score that reflects your creditworthiness as collected by different credit bureaus.
In Kenya, the laws regulating the issue of credit scores were passed in 2008 and became effective on 2nd February 2009. This is the Credit Reference Bureau regulations. These were later amended in 2013.
Since I had heard of the issue of getting credit reports, I had always said that I would try and get one. Because if I know about my health, what stops me from knowing about my creditworthiness? One of the licensed CRBs (Credit Reference Bureaus) was using SMS marketing to get people to sign up. But there was a problem. Before signing up, they required a cash payment done through M-PESA. I did not really know what I was getting out of it so I ignored that. They kept on following up with phone calls but I was not ready to play ball with them.
And then a few weeks ago, I saw someone post on their Facebook that they work at a CRB. The message was more along the lines of "just because I work at a CRB, I can't change your credit score." It should be noted that CRBs work with data that they have received from financial institutions especially lending institutions. So they cannot change anything for you off the books unless you have proof enough and the lender agrees to any of such changes.
I decided to reach out and find out what is the process of getting a credit report. And it is rather simple:
- Download a form from any of the three licensed CRBs' websites. You can alternatively fill in a form directly on the website via a portal
- Fill in the said form with your details as indicated in the form
- Sign the form
- E-mail back the signed form together with a copy of your national ID. If you have filled in the online form (via the portal), upload a photo or scanned copy of your ID
- Wait for the credit report to be e-mailed back to you
Alternatively, you can walk into any of the CRBs' offices with a copy of your ID and they will serve you with a copy of your credit report. I hit a snafu because I am yet to replace my lost ID and this particular CRB was not accepting of my passport. After a few e-mails, I managed to get a copy of my ID that they could use. And I promptly got my credit report.
The credit report contains the following details:
- Personal information - name, date of birth, ID number and whethere a credit history file exists for you
- Dashboard - This contains the score that is assigned to you based on your credit history. It is a three digit number ranging from 250 to 900 with 250 as very high risk and 900 as low risk. The scores are further broken down from A1 (900) to E3 (250)
- Inquiries - Listing all the queries that have been made against your credit history by lenders
- Contracts - Includes a listing of all contracts arising where you are the borrower. These include credit cards, loans (from banks, micro finance banking institutions and saccos), mortgages, etc. The details of the contracts will then be listed together with the monthly risk profile associated with it
- Collaterals - Details are included here of all property or assets submitted as collateral against the contracts
- Bounced cheques
- Payment Incidents
- Relations - Personal relations of yours who are known. I still don't understand why this has been included
- Disputes - Any disputes arising based on the information that was given in a credit report
The last few pages will contain a detail of all your outstanding contracts. In my case, this is a credit card that I have had with my bank. It lists all the amounts that I owe on that credit card by month and the repayments that I have made and whether there are any payments that are outstanding.
There is also a section that has all the details on the requests that have been made against your credit report through the particular CRB. These include:
- Enquiries in the past 48 hours
- Enquiries in the past 14 days
- Third party relating to any fraud including financial contracts opened using a stolen ID in the past 6 months
As per the CRB Regulations, the CRB should always inform you in case a financial institution raises any queries with regards to your credit report. This should be done at all times. You are also entitled to one free credit report each year at no cost. Any subsequent credit reports will be charged at a rate that the particular CRB wishes to levy. In case of missed payments that will adversely affect your credit score, the lender can issue instructions to the CRB to have you listed as a defaulter. However, the lenders are also required by law to ensure that they inform you pre- and post-listing on the defaulter's list.
Some must be wondering as to why information such as banking information is not included. They are not included because they are not credit facilities. Furthermore, banking information is confidential with the account holder and the bank being privy to the said information.
To apply for a credit report via mobile, below are the instructions for each of the three CRBs:
- Creditinfo CRB - Online application is done, then you will be sent the report. The cost is KShs. 10 to MPESA paybill number 510972.
- Metropol - Dial *433# and follow the instructions. Costs about KShs. 100
- Transunion - Send your name to 21272 follow the prompts. Costs about KShs. 50
So make an effort to know your credit score and in case of any queries, get in touch with the issuing CRB for further clarifications that you might need.
Someone who works for a credit reference burea helped me write this article. Unfortunately, I cannot identify her as the information was given in a private capacity & not as an employee of the said credit bureau.