Banks and Saccos will from Saturday start listing thousands of loan defaulters with credit reference bureaus (CRBs) following the expiry on Friday of the freeze announced by retired President Uhuru Kenyatta for blacklisting borrowers of unpaid credit.
As stated by the Standard, the credit providers will be free to list the defaulters with Kenya’s three CRBs – Metropol, TransUnion and Creditinfo International – jeopardising the chances of thousands of defaulters being able to borrow more.
This comes as the new administration and sector players plan to review the architecture of the credit scoring, which critics argue punishes borrowers.
President William Ruto said recently that his government will start reviewing the CRB rating formula.
He said the review will allow introduction of a new mechanism that lists borrowers based on their compliance ability and not the general perception that “most of them are defaulters”.
CRBs on Wednesday backed the reforms, which will see borrowers assigned a credit score or a number that rates their credit risk.
A majority of the negative listings are for loans disbursed through mobile phones, earlier data showed.