In Kenya, loan apps such as Tala, Branch, Zenka, and Okash have provided quick financial solutions for years, especially beneficial during the economic strain caused by the COVID-19 pandemic. However, the relationship between these loan apps and credit reporting has evolved, particularly concerning how they handle loan defaulters.
Impact of COVID-19 on Borrowing: The pandemic significantly impacted Kenyan borrowers; many lost jobs or had to shut down businesses due to stringent health regulations and decreased consumer spending. This situation led to an increased number of loan defaulters, catching the attention of the Central Bank of Kenya (CBK).
CRB Listing and CBK Regulations: Initially, during the pandemic, the CBK implemented measures to mitigate the harsh impact on borrowers by limiting the ability of unregulated digital lenders to list defaulters with Credit Reference Bureaus (CRBs). This was aimed at preventing a surge in negative credit listings due to the financial hardships brought about by COVID-19.
Current Status of CRB Listing by Loan Apps: As of now, several loan apps have been regulated and licensed, allowing them to resume the practice of listing defaulters with CRBs. This change means that if a borrower fails to meet their loan obligations, these apps can legally report this behavior, potentially affecting the borrower’s credit score.
Loan Apps Licensed to List Defaulters in CRBs: Here is a list of some loan apps that are licensed by the CBK and are authorized to submit defaulters’ details to CRBs for blacklisting:
- Zash
- Opesa
- Saida
- PesaFlash
- FlashPesa
- Loanbee
- Kava
- Tunzi
- Stawika
- Credit Hela
- KashWay
- OCredit
- Pesazone
- Wezesha
- Okolea
- Umba
What This Means for Borrowers: Borrowers should be aware that failing to repay loans on time can result in being listed with a CRB by these regulated apps. Being listed negatively can affect one’s ability to secure loans in the future, as it impacts creditworthiness.
How to Avoid Negative CRB Listing:
- Timely Repayment: Ensure that you repay your loans on time as per the terms agreed upon at the time of borrowing.
- Communication: If you anticipate difficulty in meeting your repayment commitments, communicate with the lender to potentially arrange for an extension or restructuring of the repayment plan.
- Understand the Terms: Fully understand the loan terms before accepting them, especially the rates, tenure, and implications of non-payment.
Conclusion: The ability of loan apps like Tala, Branch, Zenka, and Okash to list defaulters with CRBs underscores the importance of responsible borrowing. As these platforms now operate under CBK regulations, they hold the authority to impact your credit rating directly through CRB listings. Therefore, it’s crucial for borrowers to manage their loans diligently and maintain good financial health.
By staying informed and prudent in financial dealings, borrowers can navigate the complexities of credit and maintain positive standing in financial systems.
