By Virginia Nyambura
Credit history is a term commonly used to refer to the record of a borrower’s responsible servicing of their debts.
There are numerous advantages of responsibly repaying your debts or rather having a good credit history just like there are severe consequences for not paying up what.
A good credit history improves your chances of getting a credit card and having your loans approved.
It also raises your loan limits as it is enough proof that you pay back what you borrow within the time you promise.
Your borrowing capacity is determined by your income and your credit history. For you to get high limits, the bank must be assured that you will pay back within the time frame given.
Paying up your loans on time gives you better leverage and negotiating power to acquire the terms you wish for while securing a loan.
A good credit history also enables you to enjoy low-interest rates on loans and credit cards. Interest, which is the cost you pay for borrowing money, is mostly affected by your credit history. A good credit history, therefore, qualifies you for better, if not best, interest rates.
There is this belief among Insurance companies that people with a poor credit history have a tendency to file more claims hence such people are given higher insurance premiums compared to those with a good credit history.
The rate of Kenyans borrowing shot up from 20 percent to 55 percent in 2009, following a significant rise of quick mobile lenders, bringing a rise in the number of rogue borrowers.
The rise in borrowing increased the number of defaulters as a majority of them did not expect to be caught which contributed to more than 500,000 people getting blacklisted as defaulters by the Credit Reference Bureau (CRB).
The CRB blacklists a borrower after 90 days, past the date agreed, of not repaying a loan. The loans could be from banks, HELB loans, SACCOs, mobile money loans, quick mobile lenders and, surprisingly enough, even borrowed airtime for mobile phones by telecommunication companies.
When you are blacklisted, your credit history is tainted and your chances of accessing credit in the future are reduced as lenders are unlikely to trust you to pay up on time in the future.
The 500,000 list, that is blacklisted, has a majority of the youth who cannot qualify for the National Youth Fund and who are, further, denied the CRB Certificate which is required as part of qualification in most jobs especially those by the Government.
To help young people realize the importance of having a good credit history and to guide them grow the same, Stawika, one of the leading mobile loan app, and the only one that is 100 percent local, has kicked off a product that is specifically tailored towards the youth.
Most mobile loan lenders set their limit at 500 and often have strict measures than one needs to meet before qualifying for the same.
With Stawika, one can get a loan of 200 shillings which if one repays on time he/she automatically qualifies to a limit of 500 shilling and above.
Small emergencies definitely require you to have the Stawika Mobile Application on your smartphone for easy access and repayment of the loan.