Transunion Kenya is urging lenders to start focusing on individual credit scores that will enable them to make smarter decisions and at the same time empower consumers to take control of their financial health.

Since 2014, banks and other financial institutions have been sharing credit data for customers with the Credit Reference Bureaus. Since then, other lending institutions such as Savings and Credit Cooperative Organisations (SACCO) and fintechs, have also joined this network of data sharing. Credit data comprises of a consumer’s repayment patterns on their borrowings. The data is considered negative if the consumer doesn’t honour their commitments to repay agreed premiums on time. Positive data on the other hand, reflects repayments made on time.

For banks, a consumer credit score gives a clearer view of the risk associated with bringing the customer on board. Not only does this allow them to target the right profiles but it gives them the chance to differentiate themselves in the eyes of their customers whilst also potentially improving their own bottom line. For customers, the report helps them actively manage their credit and plan their financial future, as they have a better idea of what to expect when applying for finance. For those with a healthy credit profile, it also helps them secure better terms.

However, many customers don’t know how to access their credit report, let alone how to use it to get better loan terms. This presents an opportunity for lenders to educate their customers on how to access their personal credit information and use that information to actively improve and maintain their credit profile.

One can be able to access their credit report via TransUnion Nipashe which offers a  quick way of accessing a credit report and obtaining a clearance certificate on a mobile device. One can either send their name to 21272 or download the Transunion app to access the report and monitor their credit scores.

TransUnion Kenya CEO, Billy Owino, had this to say, “When you take a look at the Kenyan market, the need for a new pricing system for interest rates, be it risk-based or not, becomes increasingly clear. Currently, many banks take a blanket approach to pricing. This means when a customer applies for a financial product, the risk associated with the individual is rarely a factor when determining the interest rate charged.”

Mr. Owino also added that, “By looking at a customer’s credit score and other risk indicators, banks can start having meaningful conversations about a customer’s financial needs and what can be done to meet those needs in a sustainable way.”