We’ve all been in this tough financial situation at one point or another, or at least know someone who has. It can be an uncomfortable and hopelessly hopeless situation. If you are lucky you can find someone to foot your bill. Some may get quick loans to get them through and others, unfortunately, get stuck in this situation longer than they would like – There are levels to that.
The COVID -19 pandemic has put many people in such situations. With the collapse of businesses, job cuts, wage cuts, among other economic downturns, financial problems have affected many people to varying degrees.
Entrepreneurship has been a saving grace that has helped some people maintain their income and reduce the pangs of unemployment. The KCB Foundation has spent at least 16.7 billion shillings to finance and develop young people and women entrepreneurs.
His Niko Waks program, which targets people in small and microenterprises in Kenya, has helped train entrepreneurs in three major economic sectors. These include agriculture – Hydroponics, construction and manufacturing. You can apply for the program here. Over 1.5 million business opportunities for young people have been developed under the Young Africa Works program with the Mastercard Foundation.
The company has also encouraged people to explore self-employment and other entrepreneurial ventures through its 2jiajiri program. Over 2.6 billion shillings have been invested in training young people through the program. 2jiajiri also tackles the problem of youth and unemployment by creating jobs for young people through skills development and professional scholarships.
Sometimes, however, you just need a loan to give yourself that extra boost, even into business. Loans can help provide the capital needed to start a business. KCB has provided over 115 billion shillings in business loans.
Loans can also be given during the financial rainy days. It’s easier when you don’t need to fill out pages of forms and go back and forth with the bank to access the money. Mobile apps like KCB Bank’s Vooma can come in handy in such situations. Vooma is a financial mobile app that allows customers to access loans, send money to other VOOMA users, other mobile wallets like M-PESA and T-Kash, and accounts banking.
While these options can be useful, they can also be dangerous if not used properly. A loan can help you when you’re in a tough spot, but if you don’t manage it well, it can fix you at CRB.
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A credit reference bureau (CRB) is a business that collects, manages and distributes information on loans issued by lending institutions such as banks and micro-finance.
Using this information, they create reports from each borrower that contain data on all the loans (past and present) they have ever received and the repayment pattern. Your status can then be recorded as a good credit score or you can be blacklisted.
Credit information has become very important as all lenders take it into account before giving you a loan.
A good credit score shows that you have kept your loan repayments, while the blacklist shows that you have defaulted on some of your loans or have not paid according to the agreement you made with lenders.
A negative list can mean that you are accessing credit at a much higher rate in the future. You will be blacklisted for seven years. However, it is possible to delete your name before the end of this period.
Here are some tips for maintaining a good credit rating:
1. Manage your debt
The best way to ensure that you maintain a great credit rating is to improve your borrowing habits. Loans, credit card balances, and lines of credit all affect your level of debt. Having too much debt can cost you points on your credit score. The lower your debt, the easier it will be to maintain a good credit rating.
2. Pay your loans on time
To stay on track with creditors and maintain a credit rating, make sure that the required payments for each loan are made on time.
If you currently have debt of any kind, taking steps to eliminate it will gradually improve your credit score.
Don’t borrow one loan to pay off another, stop using your cards, budget, and start paying off your high interest cards while keeping minimum payments on all other debt.
3. Pay more than the minimum
Always try to pay off your debt in full and if you can’t, you should pay off at least the minimum required.
Paying just the minimum is a terrible way to pay off debt and it could stretch even small debts for years, which means more interest charges.
However, to avoid having late or missed payments on your file, make sure you pay at least the minimum.
4. Keep track of your credit score
Just because you’re doing everything right with your credit doesn’t mean everyone will. Errors could end up on your credit report and affect your score. Identity theft and credit card fraud can lead to inaccurate information on your credit report.
Check your credit report regularly to find and correct everything and maintain a good credit rating.
5. Live within your means
Learn to live within your credit means and stay within your limit. Don’t borrow more than you can afford to pay while spending comfortably – you shouldn’t stretch too much. A good budget and a savings plan can help. You can also call on a financial advisor to guide you through this process.
Credit scores are an important part of your financial health. You want good credit scores because they can unlock a lot of savings and benefits, including access to loans and credit cards on the most favorable terms.
The CRBs in Kenya are Metropol, Creditinfo and Credit Reference Bureau Africa (CRB Africa), also known as Transunion Africa.