As a Kenyan, your ability to acquire loans is highly determined by your credit score. A high credit score will enable you to access loans easily compared to having a low credit score, which paints you as one who can easily default on a loan.
Appearing on NTV on Tuesday, September 16, Metropol Corporation Credit Reference Bureau Managing Director Sam Omukoko listed repayment of loans taken and the amount of debt that you have as some of the factors that determine your credit score.
Aside from the two, Omukoko listed three other factors, including the length/period one has been borrowing, one’s mix of credit taken, such as instalment credit, revolving, and open-account, as well as other stability factors such as one’s physical address and proof of income.
On the mix of credit taken, Omukoko noted that it determines the flexibility that one brings during repayment. This is because the three different types of credit in the mix offer different payment rules, providing lenders with knowledge of one’s preferred credit.
“If it is instalment credit, you will pay monthly; if it is revolving, then you will have a limit, perhaps on your credit card; and if it is open credit, it operates on bullet payments. For instance, after 30 days, you are required to pay the full amount,” he noted.
Omukoko noted that the five factors combined enable lenders to calculate one’s credit score. He further detailed that each factor carried its own weight when calculating the credit score.
“When you look at the repayment, it could be about 30 per cent. The total debt that you have is 40 per cent. The credit mix could be about ten per cent. So the weighting of these components in your credit profile is the one that will ultimately determine your credit score,” he informed.
As for whether one can calculate their own credit score, Omukoko noted that it was not possible, but added that a system was in the works to aid individuals in doing so.
“We would like a dashboard to be created somewhere where you can actually input your own data and calculate your own credit score. We are working on that, where you can actually build your score using a delta function, which can tell you the factors that are contributing to your good score and what is pulling you down,” he explained.
Currently, the credit score is calculated by a preset formula in the system of most CRBs. However, all this is not possible without data submitted to CRBs by those seeking loans.
In 2024, the Digital Financial Services Association of Kenya (DFSAK) noted that digital lenders were dispensing over Ksh10 billion monthly in loans to support businesses and cover immediate needs.
A significant percentage of these loans were taken out for daily expenses like food and medical bills, driven by the increased cost of living.
