Consequences of Being Listed in CRB Negatively

Being negatively listed on a credit reference bureau can be upsetting for most people. Most Kenyans, particularly the young, have expressed concern at even the slightest mention of CRB.

It's understandable why there was excitement on social media when President William Ruto announced that his administration was on the verge of removing over 4 million Kenyans from the Credit Reference Bureaus' (CRBs) “blacklist”.

CRBs are companies that collect the credit information of borrowers, who can be both businesses and individuals. Lenders submit details of loanees to CRBs enabling other lenders to access the borrowing history of a specific borrower to help determine their creditworthiness. 

What is a Negative Listing?

It has long been assumed that those who have been negatively listed are on a "blacklist" and will be unable to obtain credit in the future.

However, there has been misinformation about the Credit Information System, particularly how CRBs work.

A person with a negative listing on CRB is someone who has a history of defaulting or failing to meet their credit obligations.

Negative information on CRBs may include, but is not limited to:

• Non-performing accounts (loans not serviced for 90 days)
• Cheques that are dishonoured for reasons other than technical failure
• Proven cases of forgeries and fraud
• Bankruptcies, liquidations, and receiverships.
• Unauthorized use of borrowed money

When is a Negative Listing Submitted to CRB?

Individuals are notified that they will be listed if they do not make any payments on their loan after 90 days for banks and 30 days for mobile lenders.

The Central Bank of Kenya has licensed several CRBs to collect, manage, and share financial data. They are:

1. TransUnion (CRB Africa)
2. Metropol Corporation
3. CreditInfo

Consequences of Being Listed Negatively on CRB

If your loan is negatively listed on CRB, it has been consistently classified as non-performing for an extended period of time. Non-performing means you didn't try to make any partial payments while the loan was active. 

The following are some of the consequences of being negatively listed by CRB:

The loan terms may be more stringent the next time you apply.

You do not want lenders and financial institutions to treat you unfairly. If you continue to miss loan payments, keep in mind that the CRB shares your information with all lenders.

Even if you pay off your defaulted loans, the next time you want to borrow may be tricky. It's possible that your previous or current negative listing can furthers more strict lending terms for you.

Effects negatively on your credit score

A credit score is a number used by lenders to determine the likelihood of timely payment if they give a loan to a specific applicant. Your credit history influences your credit score. Your credit score may have an impact on your loan application and the interest rates you will pay. Because lending money to someone with a bad credit score carries significant risks, interest rates for such borrowers are typically higher. 

You may miss out on valuable career opportunities.

Some of private and  public companies including the Kenyan government and all county governments, require the CRB certificate for job applicants. 

Although the law now prohibits employers from requesting clearance or compliance certificates from employees unless they are guaranteed an offer of employment, the mandatory requirement for a CRB clearance certificate has not been relaxed by county governments' public service commissions.

Competing for a position in government

Sections 20(3) and 20(4) of the Public Officer Ethics Act, Cap. Article 183 of the Kenyan Laws and Article 73(2)(a) of the Kenyan Constitution both emphasise leadership and integrity. 

A credit bureau reference certificate, in addition to other clearances, has been approved as a requirement for those seeking positions in the public sector. If you have a negative listing in CRB it will hard for you to get a cleareance certificate unless you pay off all the loans that you owe.

Why Should You Check Your CRB Listing Often?

1.If you remove negative information from your credit report, your credit score will improve. As a result, you may be able to obtain loans with lower interest rates and longer repayment terms because the lender is more confident that you will make your payments on time.

2. Checking your credit report can give you an idea of what creditors will see if you apply for credit, especially if you plan to take out a large loan or an emergency loan. If there are errors in your report, it may harm your credit and take some time to fix. 

3. Reviewing your credit report on a regular basis allows you to identify and remove potentially damaging personal and financial data caused by identity theft, errors, or out-of-date entries. Early error correction can help you avoid problems when applying for a loan or a job with a potential employer.

4. Examining your credit reports can assist you in determining how to rebuild your credit if you have poor credit. Instead of assuming where you're going wrong, you'll be able to see which accounts are lowering your score and work on them.