Editorials

EDITORIAL: Credit score plan timely

SAM

Metropol Credit Referrence Bureau MD Sam Omukoko. FILE PHOTO | NMG

The cost of loans has always been a big subject for individuals and enterprises, but it got more intense in Kenya when, about a year ago, the law was changed to usher in controlled pricing of loans.

It is a major development that just when the Treasury has made the first steps to revise the capping law, there is an innovation that is expected to give borrowers more breathing room when they negotiate for loan rates thanks to their borrowing history.

Credit reference firm Metropol says with the scores, borrowers can look for the cheapest rates from lenders in a non-controlled lending market.

It is a step in the right direction that frees up the borrower who has been subjected to near-threats by commercial banks based on their credit scores.

READ: Borrowers get credit score to negotiate cost of loans

Under this proposal, no one should be blacklisted for loans, but should be treated based on their repayment behaviour.

Should the capping law be repealed, we urge the banks to honour their customers by charging for loans according to individual scores.

The competition watchdog should also step in to ensure that the banks that have a lobby do not resort to monopolistic practices by erecting barriers that would render individual scoring meaningless.