CRB listing: Why your name may remain on record after repaying a loan

Kenyans who have repaid their loans may still find their names on the Credit Reference Bureau (CRB) negative listing, raising questions about how long the record remains and whether settling a debt is enough to restore their credit status.

Susan Mang’eni, Principal Secretary in the State Department for Micro, Small and Medium Enterprises (MSME) Development, has explained why repaying a loan does not necessarily erase a borrower’s credit history.

Mang’eni noted that a CRB listing is not always negative, as the system records both positive and negative credit information.

“Maybe just to clarify, the CRB listing is not bad; it’s just about information sharing. We have positive listings, and then we have negative listings. But then what has been happening is that the financial institutions tend to share negative, not positive,” Mang’eni said during an interview.

CRBs collect and maintain borrowers’ credit information, including their loan repayment history, from financial institutions and other authorised credit information providers. Lenders use this information, alongside other factors, to assess applications for loans and other credit facilities.

One reason a borrower may still appear on a credit report after repaying a loan is that settling an outstanding debt does not automatically erase the history of the default.

A borrower’s record can reflect the fact that they previously failed to meet repayment obligations, even after the outstanding balance has been cleared.

In her remarks, Mang’eni said a borrower who had been negatively listed could remain associated with a default record for about seven years, even after repaying the debt.

“Once you get negativity listed on CRB, you stay in that status for about seven years, in default status, even after you have paid before it is dropped off, you are still being seen as a defaulter after 7 years, then you can be cleaned up totally,” she said.

However, the general retention period set out in Kenya’s Banking (Credit Reference Bureau) Regulations, 2020, is five years from the date of final settlement of a non-performing loan. The regulations provide a separate seven-year period for information relating to a customer’s discharge from bankruptcy.

The regulations also require credit reference bureaus to remove the relevant information when the applicable retention period expires.

This distinction is important because a borrower’s historical credit information may remain on record after payment, but that is not the same as an outstanding debt or an account that has not been updated to show settlement.

The time taken for a CRB to update a borrower’s status after repayment depends partly on how quickly the lending institution submits the updated information.

Creditinfo Kenya says a financial institution may take up to three working days to update the bureau after a customer clears a loan, followed by approximately two to three working days for the bureau to update the loan status. However, the timelines may vary between institutions.

Under the 2020 regulations, credit information providers must update relevant information immediately when a change occurs, while a bureau must update its database within two days of receiving the updated information.

Borrowers who have settled their debts should therefore confirm that their lender has submitted the repayment update rather than assume their records will change immediately after making the final payment.

A negative CRB listing can also affect a lender’s assessment of a loan application, although it does not automatically mean a borrower can never access credit again. Financial institutions consider credit history alongside other factors when deciding whether to approve a loan.

While a record of a previous default may influence a lender’s decision even after repayment, CRBs can also hold positive information showing a borrower’s repayment history.

Mang’eni has argued that credit information sharing should recognise that a previous default does not necessarily mean someone will always be a bad borrower.

The government introduced the Hustler Fund as part of its efforts to expand access to credit, with Mang’eni saying the initiative was intended to help formal financial institutions recognise that not every Kenyan with a negative credit history should automatically be considered a bad borrower.

Borrowers who have cleared their debts can request a credit report from a licensed CRB to confirm whether their repayment status has been updated. Under the 2020 regulations, customers are entitled to a free copy of their credit report from each bureau at least once a year, alongside certain other specified circumstances.

If the report still shows an outstanding balance, borrowers should contact their lender, provide proof of repayment and request an update to the information submitted to the bureau.

Where the report contains inaccurate or outdated information, borrowers can formally dispute the record with the bureau in writing and provide supporting documents. The bureau is required to investigate the complaint and work with the institution that supplied the information to establish whether a correction is necessary.

After the issue has been resolved, borrowers should request an updated credit report to confirm that the changes have been made. If a dispute is not resolved within the timelines prescribed by law, the regulations provide for the disputed information to be deleted in specified circumstances.

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