By Andrew Walyaula
waliaulaandrew0@gmail.com
Lenders in Kenya have gradually adopted the risk lending based mechanism, a move that has led to the rise of credit rating uptake.
The Credit Reference Bureau (CRB) Regulation 2020 mandates lenders to use a customer’s credit score when appraising a credit application.
Metropol CRB General Managing Director Sam Omukoko urged lenders and borrowers to use CRB ratings, a quantitative assessment of the cash flows of a business entity that determines the financial strength of servicing a financial obligation.
Speaking during a webinar which was attended by over 200 business people on Medium, Small and Micro Enterprises (MSME) Access to Credit, Omukoko said that credit scores are updated every time new information is added to the borrower’ profile.
“Banks are now relying on the credit reports to evaluate credit worthiness of any business. They also use credit scores and not just credit reports” Omukoko said.
Importantly, the credit scores vary from 200-900. Any score below 400 indicates that an account is having problems in servicing its loans, while scores above 750 show that the account is servicing its debts very well.
The International Trade Center Senior Advisor Ian Sayer advised the small and medium sized enterprises to use the MSME Financing Gateway platform, a facility that lists sources of financing, business support organizations and advisers.
“This can help you improve your conversation rates. Through the platform, you can get inquiries from enterprises that have already listed services that match your needs,’ Sayer said.
So far, the Metropol CRB has rated over 600 businesses and large cooperations that can deploy the rating in negotiating for the appropriate interest rates.
MSME Financing Gateway platform was developed with the financial support of the European Union-funded East Africa Community Market Access Upgrade Program (MARKUP) and is hosted in Kenya Private Sector Alliance (KEPSA).
