A credit reference bureau, or CRB, is a company licensed by central bank of Kenya to collect, store and collate credit information on individuals and companies from different sources and provide the information in form of a credit report upon the request of a lender.
Many borrowers have at one given time come across the CRB headache, one that can kill that golden dream of you borrowing money from a lender and starting a business.
For starters, having your own business idea is one thing and starting it up is another thing altogether. At some point, says Daniel Ohonde, Chief Executive Officer, Real People East Africa, an entrepreneur would be in dire need of funding to help accelerate his or her business to the next level. Real People EA is a credit-only micro lending company with operations in Kenya, Uganda and Tanzania.
This is the time lending companies contact the credit reference bureaus to ascertain your credit holiness or otherwise and determine whether or not you are fit to get the loan needed.
“Before we lend you money, we look at your past behaviours including your credit records. We also assess your business and it must have existed for two years minimum,” adds Mr Ohonde.
Credit business is filled with loan defaulters as well as those who pay in time. This is where CRBs come in and if your name falls in the list of defaulters, no matter the amount, your deal could be as good as dead. “We don’t lend money to defaulters, anyone listed by CRB cannot access any loans with us,” confirms the Real People boss.
Lending to a tune of up to Ksh5 million payable in 36 months can be a risk and therefore credibility is key to the business.
Interestingly, once a defaulter is listed by CRB, he or she is not able to get loans from any lenders elsewhere, including banks.
“Once you are listed by credit reference bureaus, you are not able to access any loans from elsewhere unless you pay back and wait for three months,” Daniel Ohonde further says.
At the times when entrepreneurs confront issues that continually threaten the success of their businesses, the difficulty to finance one’s business should be the very least and therefore avoiding CRB listing is paramount according to Real People East Africa.
The crucial yet missing link is the entrepreneurs’ understanding of his company’s credit score, a core with which funding will be impossible or probable. “We are working to create financial literacy and urge entrepreneurs to know their businesses in and out, learn the score before borrowing any sums of money,” concludes Daniel Ohonde.