Tragedy of city youths getting blacklisted after squandering mobile loans
Thousands of Nairobi’s youth are finding their names blacklisted by Credit Reference Bureau (CRB) after defaulting loans borrowed from mobile apps.
A recent survey showed that many Kenyans have become prisoners of digital loan platforms, in some instances borrowing to gamble or settle previous debts.
Digital loans are easy to obtain, short-term, carry a high interest rate and are available from numerous bank and non-banking institutions, according to the survey.
Many city youths often take up the loans without proper understanding of the consequences of not repaying.
Peter is one such youth who was recently listed in CRB by a mobile application, Branch. He borrowed money for sports betting and lost all of it .
He ignored all follow up calls by the lender reminding him of overdue repayments. It was the final notification that his name would be forwarded to CRB that left him perplexed.
“I had no idea there was anything like CRB. I thought I would just look for the money and pay my loan with time and did not know of any penalties that included being blacklisted,” Peter told Nairobi News.
His predicament is similar to many other youths who can now not benefit from credit facilities.
TransUnion CRB chief executive Billy Owino explains that there is need for youths to receive financial literacy information to help them remain creditworthy.
“At CRB, we are not the ones who list defaulters, it is the financial institutions that are mandated to forward the details of defaulters every month.
“Once the banks and microfinance institutions upload the information of the defaulter, we cross check it and any entry that is erroneous or does not conform to the stipulated template is rejected. The correct information is then stored in the system and is given to institutions that inquire about a client’s creditworthiness in the form of a scorecard,” Mr Owino explained.
The scorecard ranks a low risk customer as AA followed by BB, C, D, E, F and the high risk being J.
A customer who has never borrowed is scored as a YY, and although many believe it is safe not to borrow, Mr Owino advices customers to borrow and pay back on time so as to grow their credit worthiness.
When a customer is listed and wants to be delisted and cleared, they are required to pay the loan and immediately apply for a clearance certificate from CRB that will enable them access more loans.
“When we receive a customer’s inquiry, our team generates a credit report which by the way every Kenyan is entitled to a free one every year. We then take the customer through the report to help them understand which bank or financial institution listed them and for what defaulted payment. We then refer them to the institution to help resolve, after which they are given a batch number that they can use when applying for a clearance certificate that will cost them Sh2,200,” Mr Owino explains.
The defaulters report however remains in the system for five years.
To youths like Peter who have been blacklisted, CRB advices them to contact them for guidance on how to resolve.
“We have a short code 21272 that one can use and follow the prompts to obtain a credit report that will be sent via email and a correspondence done via the same on how to resolve and obtain a clearance.
“Our TransUnion Nipashe App, available on Android, is also another way customers can be assisted as well. We have tried to make sure that customers need not travel to our Delta Towers office to get assisted. The important thing is for youths to know that if you have been listed its not the end, you can resolve it and access more loans,” Mr Owino explained.