Fresh data from Transunion Credit Reference Bureau shows that more than 500,000 people in Kenya are currently blacklisted with Credit Reference Bureau (CRB) for defaulting on mobile loan of as little as Sh500.
This may completely reduce their chances of accessing similar or much bigger loan amounts from local banks for a period of up to seven years.
There are currently more than 50 mobile phone loan apps, making it much easier for many Kenyans to get access to these 30-days repayment loans.
Most people taking these loans cannot afford them, hence end up failing to pay leading their names to be forwarded to the Credit Reference Bureaus (CRBs) and eventually getting blacklisted.
Once blacklisted one cannot access another loan until he or she repays that loan. After repaying, the borrower may still remain in CRBs book with a low credit rating for seven years, a situation that can keep banks from extending a loan to them within that blacklist period of seven years.
The blacklisted Kenyans are mostly those borrowing through mobile and simple online platforms such as Tala App, M-Shwari, KCB MPesa and the like.
Transunion Chief Executive Officer Billy Owino said most of these individuals are finding themselves blacklisted for lack of knowledge on the consequences of defaulting paying a loan, which is as little as the Sh500.
“Most of the borrowers do not know how they got blacklisted. We get like 200 calls daily from individuals in this category asking how they ended up in the blacklist,” said Mr Owino in an interview.
Kenyans have a pattern of borrowing from several platforms at the same time, without caring about the risk they are putting themselves into, and the lenders do not take time to check what other platforms these people have borrowed from before they offer them the loans.
Considering in Kenya we have more than 50 mobile loan platforms, an individual can borrow from Tala App, M-Shwari and other platforms in a single day, and get the cash from all of them.
This is possible because most of the mobile and online loan platforms process the loan in a few minutes without checking the borrowing habits of that lender using the data provided by CRBs.