How CRBs In Kenya Make Money
TransUnion, Metropol and CreditInfo collect and store credit information on individual users from registered financial institutions and make the same information available to other institutions that need credit information on a user for a specified purpose.
So how do these credit bureaus make money?
TransUnion, Metropol and CreditInfo are for-profit organizations hence the need to generate revenue to offset their cost base. With the recent proliferation of mobile loans in the Kenyan financial sector, the role of credit bureaus has increasingly been put on the spot with the risk of over-indebtedness leading to many youths being listed with a negative CRB status owing to defaulting on the micro-loans. If you have accessed a loan from any registered financial institutions with explicit access to share their borrower’s information to the credit bureaus, your information is stored in the databases of either one or more of the three CRBs.
The main channel by which CRBs make money is by creating and selling credit reports of individual borrowers whose information has been shared by financial institutions. This may include accredited SACCOs, banks and online lenders, although they are largely restricted from accessing credit reports stemming from a directive by the Central Bank of Kenya from 2020.
In addition, CRBs may also gather publicly available data to enrich their databases with more data points that lead to a more holistic credit report that directly affects your ability to get liquidity and loans from financial institutions.
The CRBs can then sell the consumer credit reports to a lender trying to qualify a loan applicant or a credit card company determining your credit limit.
The CRBs also sell credit information to companies that want to use the data for marketing purposes. For example, a consumer with a low or negative credit status may be targeted by firms offering loans with no CRB check.
In a nutshell, CRBs do more than blacklist or whitelist potential borrowers. There are other services such as data analytics and their own white-label financial products that CRBs make money but their core business remains collecting, storing and disseminating credit consumer reports.