President William Ruto: CRB listing review starts next week

President William Ruto during an interview on Al-Jazeera that aired on Saturday, September 24, 2022. [Courtesy of Al-Jazeera]

President William Ruto has said that the government will start reviewing the credit reference bureau (CRB) rating formula next week.

Dr Ruto says the move will allow introduction of a mechanism that lists borrowers based on their compliance ability and not the general perception that “most of them are defaulters”.

The president made the remarks during an interview on Al-Jazeera on Saturday, September 24.

“Next week, we are going to rework the whole credit rating system. The current one is an all-or-nothing system; you’re either listed as a defaulter, or not. There are some 15 million people listed in the CRB. We’ll keep the credit reference bureaus, but change the scoring mechanism so that it’s not all-or-nothing,” Ruto told Al-Jazeera’s James Bays.

During campaigns in the run-up to August 9, 2022 General Election, Ruto said many young people could not access loan facilities because they had been listed in the CRB as defaulters.

He promised that should he win the presidential election, he’ll review the rating formula to open up credit access to the young people who ideally wouldn’t access the capital under the current CRB listing formula.

A credit reference bureau (CRB) is a firm that collects information from financial institutions and provides consumer credit information on individual consumers for a variety of uses.

CRBs hold credit data shared by financial institutions and facilitate credit lending to financial institutions.

The information stored in CRBs are monthly basis credit information on all existing and new credit facilities granted to a person(borrower) by the banks, financial institutions, and other institutions authorised by the Central Bank of Kenya.

CRB listing refers to a positive or negative record of your credit information that is submitted to CRBs by financial institutions.

The CRB receives both positive and negative listings. Positive means a loan that is being serviced (loan repayment is consistent) and negative means a loan that went into default (no payments).

It takes 90 days for banks and 30 days for mobile lenders after which individuals are notified that they are going to be listed if they don’t make any payment on their loan.

Ruto has said new policies will be formed to guide credit rating.

Credit rating is the evaluation done by financial institutions on an individual to determine his or her ability to pay back a loan and chances of default.

Credit listing, on the other hand, is an individual’s credit profile that is shared by the financial institutions.

In Kenya, there are three CRB firms. They are Metropol, TransUnion and Credit Info.

December 2021 data from the CRBs show that the accounts negatively listed (defaulters) stood at 4.6 million out of the 15 million accounts, reflecting a jump from 3.2 million accounts in April 2020.

The president is in the United States of America, where he recently attended the United Nations General Assembly.