CBK says credit information sharing has not had impact on loan pricing

The Central Bank has raised concerns that credit information sharing has not had a great impact in pricing of loans in Kenya.

According to the banking regulator, despite the existence of Credit Reference Bureaus, many borrowers are yet to use their credit scores to negotiate for cheaper interest rates.

Introduced in 2010, credit information sharing regulations sought to introduce transparency for credit providers by having information on borrowers.

Six years on and the CBK is yet to see the benefits transmitted to the market.

“It hasn’t benefited as much in terms of lower cost of borrowing even for those with good credit scores,” CBK Governor Dr Patrick Njorgoge said.

According to the CBK Governor, borrowers with positive credit scores ought to be enjoying interest rates that are 5 percent lower than what is offered by lenders.

The Central Bank is pushing for changes the credit information sharing regulations to benefit borrowers.

“We have some questions we need to improve for instance information access and can you access your credit quickly,” Dr Njoroge said.

By law, borrowers are entitled to one free credit report yearly. Kenya has five licensed Credit Reference Bureaus.

Data from the Credit Information Sharing Association shows that four million credit records have been generated in the last six years from 350 credit providers.

The regulator is also seeking amendments that could see borrowers clear bad data on their credit score that could affect their chances of negotiating better rates.