Nowadays, it has become extremely important for debtors ( an individual or a company) to clear their loans since financial institutions like banks, Saccos, loan apps, HELB, M-Pesa etc have started listing defaulters on Credit Reference Bureau (CRB).
Once listed on CRB, you have to make sure that you clear your name in order to improve your chances of getting a second loan.
CRB is the company that keeps track of your credit rating so that potential lenders (Banks, Sacco’s, Microfinance firms etc.) can assess your creditworthiness all the while keeping a record of defaulters.
It collects the customer credit information from all lenders and then manages the information gathered by regularly updating the customers’ credit scores per their transactions with various financial institutions.
When a lender wants to know a borrower’s credit status, CRB will forward the report to help the lender in making decisions in regards to the borrower.
How important is a CRB Clearance?
Most companies and institutions avoid hiring loan defaulters like a plague.
If your name is listed on CRB Kenya, chances are very high that potential employers who use CRB records as hiring criteria won't give you a listening ear.
It is also part of pre-employment screening and requirement for integrity clearance for public office jobs.
More so, many insurance companies like car insurance or personal health cover providers will charge you higher premiums compared to someone with a better credit score.
Most banks or SACCOs will also be very reluctant in providing you with simple loans and asset financing since they have every reason to believe that you won’t pay back.
How do you get a CRB clearance certificate?
It is quite easy to acquire the clearance certificate from any of these three CRB firms licensed by the Central Bank of Kenya (CBK):
TransUnion Africa, Metropol and Creditinfo.
If you wish to receive your yearly credit information, then make a point of registering with one of the three CRBs.
Once you register with either one of the three CRBs, you can get the certificate at a processing fee of Ksh 2200.
How to check CRB status online:
Method 1: Metropol credit reference bureau limited
You can access CRB services from Metropol through Metropol website, Metropol crystobol app or by dialling*433#.
You will Pay Ksh 100 as registration fees through the Paybill number 220388.
Enter your ID number as the account number.
You’ll get an SMS with your unique PIN details, a Reference Number and a special Link
After you register you can now dial *433# and log in using details provided to access your credit report.
Method 2: Transunion Africa CRB Kenya
Whoever decides to get their credit information from TransUnion will be required to visit crbafrica.com or transunionafrica.com where you will fill in the forms and send them back.
For you to always get credit reports from Transunion, all you have to do is send your name to 21272.
You will then receive your CRB status.
Method 3: Credit Info CRB Kenya
Just like the other two, one has to simply visit creditinfo.co.ke to register and will afterwards be getting an annual report on their credit status on your email address.
However, if you have already registered in any of the three CRSs, you can easily request your clearance certificate from the specific website(s) for free.
Note: CRB Credit report in Kenya is Ksh 650
CRB Clearance certificate in Kenya is Ksh 2200
What CRB Credit Enquiries reveal about you
A credit enquiry is a when a credit provider checks your credit report every time you apply for credit.
Whether you qualify for a credit facility or not, the enquiry will be captured in your credit report.
The information on the number of credit enquiries is available to another credit provider who checks on the credit report.
For example, if Equity Bank makes an inquiry when you apply for credit with Family Bank, when Family Bank makes their enquiry as well, they will be able to see that Equity had enquired too.
The higher the number of credit checks done by lenders, the higher the number of enquiries being captured on the report.T his type is known as hard enquiry.
Hard enquiries can affect your credit score negatively.
Meaning of a "Write Off"
For those who have accessed their credit report already, you might have come across a credit status showing as "Write Off".
A write-off" is an accounting term which means that the lender doesn't count the money you owe them as an asset of the company anymore.
It is a bad debt which the bank /lender believes they have no more hope of collecting from you.
For the lender, the write-off means recording a loss in the books and ending collection efforts.
Even after writing off your debt, a lender may try to recover the money you owe them by selling the debt to a collection agency.
How Write Off Affects Access to Credit:
1. Write-offs contribute to bad credit.
2. The more write-offs you have on your credit report, the lower your score will drop.
3. A written off debt is still a debt and therefore you are still a debtor.
4. With just one write off on your credit score, the interest rate will rise tremendously.
5. Lenders typically view you as far worse than a late payer.
What to Do if You Have a Write Off?
1. Keep paying your current bills and avoid this issue in the future.
2. It can be beneficial to pay a written-off account, despite the fact that it has already hit your credit report.
3. You can negotiate with the creditor to mark the account as active when you start paying.
How Long Does it take to get a CRB Clearance?
Give yourself up to three days before applying for the certificate after doing your clearances.
A day is, however, enough in some instances since banks send back daily reports to the CRB so technically your information should update on a daily basis.
The time between the CRB Kenya clearance certificate application and certificate issuance varies depending on which institution you choose to work with.
Remember that a CRB certificate of clearance is only valid for the day of issuance thanks to the daily borrower record updates.
Always strive to make an application just when you need it. A month-old certificate or even older might not be accepted.
Dispelling the common myths about your information at the CRB
Myth 1: I have never taken a loan, therefore I have a clean credit history
Fact: If you have never taken any loan facility, it means that you have no credit history yet. You have not demonstrated whether given a loan or a credit facility you can pay back and promptly
Therefore to have a credit history, you have to open a credit account to establish a line of credit that will become the foundation of your credit history.
Myth 2: No credit record at the bureau means clean or good credit history
Fact: If you have never taken a loan facility but have defaulted on other utility debts such as water, electricity and even power, that credit history will not reflect at the bureau.
Therefore in such a case, the absence of a credit record on you at the bureau cannot be assumed to be a good credit history but only an indication that either, you have never taken a loan facility with a lender or had taken and repaid promptly.
Myth 3: Bad credit history means no access to future loan facilities
Fact: If you may have defaulted on your loans, your lenders will submit the information also termed as negative information to a credit reference bureau so that it can be shared with other credit providers.
This will then be part of your credit history but this does not mean that you cannot access any further loan facility from any lending institution.
All it means is that whenever you approach any lender, they will take extra caution in their decision due to the degree of risk in lending to you. Based on their own credit policies, the lenders can either lend you on tight conditions or deny you credit.
