Personal Credit rating in Kenya

Importance of Personal Credit rating in Kenya

Personal Credit rating in Kenya or credit reference bureaus is forcing banks to share customer information. Banks in Kenya for a long time have been very unwilling to share information with other Banks on borrowing customers and for years many ‘sat’ on non performing loans. This resulted in the public taking advantage by borrowing from almost all the banks and then defaulting.


 Personal Credit rating in Kenya

Personal Credit rating in Kenya


In the mid 90s there was a wakeup call as major Banks struggled with non performing loans which were greatly affecting their bottom line. The government of Kenya had to bailout some banks where it was the major shareholder to prevent obvious closure. This resulted in a great debate in Parliament and some defaulters ended up being mentioned in Public. So when the suggestion to have a Credit Rating Bureau was made many welcomed the idea.

 Justification of Personal Credit rating in Kenya

Personal Credit rating in Kenya compiles and maintains an individuals’ credit history and aims at evaluating the ability of the potential borrower to repay a loan that is Credit rating. It is a recognized evaluation of an individuals’ repayment ability based on financial transactions carried on in the past, that is, credit worthiness of an individual. This credit worthiness is essentially determined through statistical analysis of the available credit data.

With introduction of products by the banks such as unsecured personal loans, mortgages, and unsecured overdrafts, it is important for banks to have good credit rating system. Personal Credit rating in Kenya is still not yet fully functional because most data is still being collected.

Banks are still using their own Credit Scoring models. An individual’s credit score affects his or her ability to borrow money through the banks.

 Some of the factors that influence Personal Credit rating in Kenya include:

  • Ability to pay a loan pegged on asset base.
  • Debt ratio/ level of the individual.
  • Spending patterns of the person.
  • Interest rate charged on existing loans and the future loans.
  • Saving patterns of the individual.

 Personal Credit rating in Kenya can be used for the following:

  1. To help determine whether an individual can be offered any credit facilities, for example, unsecured personal loan, credit cards etc.
  2. It can be used to determine and adjust the insurance premium being charged to an individual. This especially applies to insurance policies taken when being granted a credit facility.
  3. The ratings are also important to substantiate an individual’s eligibility for employment.


Personal Credit rating in Kenya has definitely changed how banks and even individuals do business because it is used to establish the integrity of an individual.

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