Individuals and companies who have been listed by banks as bad debtors, will miss out on credit for a minimum of seven years. This is a milestone for the lenders which has been made possible by Credit information Sharing by Credit bureaus,banks and other credit giving institutions.

A newly published report by Financial Services Deepening (FSD Kenya) – a non-profit organisation that monitors the financial services industry – says the build-up of consumer information had resulted in the listing of 203,518 individuals and 9,954 businesses as bad debtors by April last year.(courtesy BD)

Credit sharing information has been a handy instrument to lenders by providing information about the borrowers. Banks and other credit information has in the past lost a lot of money through debtors who failed to pay their loans.

The high number of blacklisted individuals and companies has been blamed on the banks' decision to share only negative information about borrowers leaving out the positive information. Such information include issuance of bounced cheques, late loan payments or default. The information is not meant to deny the borrowers credit but rather affect the rate at which they borrow. However, banks have blacklisted such individuals to deny them credit completely.

During the launch of Credit Reference Mechanism, Central Bank of Kenya governor Njuguna Ndungu had told consumers to expect cheaper credit because information sharing would help banks reduce credit risk – a benefit that they were to pass on in terms of lower interest rates, a promise consumers are yet to realize.

Read: Lenders to Benefit from Accessible Borrowers’ Information and You Wont Get a Bank Loan if you Owe HELB.