Regulatory Alerts2022-11-10
Banking Circular No.3 of 2022 - Credit Reports Issued by Credit Reference Bureaus
This banking circular from Kenya's Central Bank of Kenya (CBK) addresses concerns about credit reports and their usage by lenders. The Credit Information Sharing Mechanism was launched in 2010, incorporating both positive and negative information since 2013. Over 160 million credit reports have been accessed, with an average of three million requested monthly from the licensed CRBs. Despite these achievements, there remain public concerns that borrowers with adverse credit reports are denied loans rather than having their credit risks priced accordingly. The Banking (Credit Reference Bureau) Regulations 2020 emphasize that a customer's credit score should not be the sole reason for denying them a loan. To address this issue, CRBs have been directed to include a statement at the top of all credit reports, reminding lenders and enhancing borrowers' awareness on usage of credit reports. Additionally, they are encouraged to improve credit report quality, enhance credit scoring models, align with best practices, and ensure prompt data updates. Failure to comply with this directive will result in remedial action.