Credit History Requests Declined Marginally in 2023 as Interests Rates Rose
Credit reports requests declined by 3 percent, from 37.5 million in 2022 to 36.4 million, in 2023, which the CBK attributes to low business activity and lower demand for credit.
At 4.1million requests, March 2023 topped the year with the highest credit reports likely due to a hike in the Central Bank Rate from 8.75 per cent to 9.50 per cent.CBK maintained the rate in May, adjusted it to 10.50 percent in June, then raised it to 12.50 per cent in December.Lending institutions normally request for the reports before advancing loans to individuals as a measure to gauge their credit worthiness.
The report is normally provided by the Credit Reference Bureaus (CRBs) and third-party data sources like insurance companies, trade companies among others.
“The requests for credit reports declined by 27 percent from 10.2 million in quarter one to 7.3 million in quarter two. However, the requests rose again from quarter three through to quarter four,” notes CBK in Banks Annual Supervision Report 2023.
The unfavorable business and economic environment were influenced by factors including high cost of doing business, rising interest rates and the depreciation of the shilling. Other factors included adverse effects of climate change and geo-political tensions. The number of third-party data sources stood at 2,138 in the year 2023 having increased from 2,091 in the previous year.
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