The ever-increasing rise of money-lending apps, coupled with the hard economic times, and the craftiness of the human mind, leaves many hoping and praying that they don’t get caught and get negatively listed by a Credit Reference Bureau. The result of such listing is that one is termed as a high-risk borrower, and credit providers should be more careful when lending such persons. Credit providers are also allowed to apply more stringent measures when lending. However, there has been an increase in the number of cases where people claim that they have never defaulted in payment of loans, yet they find themselves negatively listed. Even the courts have taken cognizance of this fact, as seen in a fairly recently decided case. What duty do Credit Reference Bureaus (CRBs) owe individuals, and what duty, if any, is owed by credit providers as regards listed individuals?
First, credit providers, such as banks and microfinance banking institutions have a duty to issue a customer with a 30 days’ notice before submitting any negative information to a CRB. They should not submit any negative information to a CRB where the customer has notified them of any inaccuracy, unless it has been sufficiently dealt with. If a credit information provider submits any inaccurate information, it ought to inform all CRBs to which the information was submitted that the given information was inaccurate within five days. It should further investigate the cause of the inaccuracy within fourteen days and inform the bureau(s) of its findings.
The second duty owed to a customer is to be notified that his/her information has been forwarded to a Bureau. This should be done within thirty days of furnishing that information to the Bureau.
Third, a CRB can only retain a customer’s information for five years after settlement of the amount in default or seven years after discharge from bankruptcy. It is also important to note that this information is not the only factor to be considered when determining a customer’s chances of obtaining credit. Other factors should also be put into consideration. Also, both the credit information provider and the CRB have a duty to keep updating a customer’s information to reflect the current status. This helps reduce the chances of inaccurate information negatively affecting a would-be borrower.
In the event of wrongful listing in a CRB, what should one do? The first step is to notify the Bureau in writing of the disputed information. The Bureau should attach a note showing that the report is under investigation, then send the credit information provider a notice of the same. The credit provider should then complete its investigations within fourteen days and give the Bureau a notice of resolution of the matter, and the changes, if any, to be made.
The Bureau should also conduct its own investigations, based on the relevant information provided by the complainant, within fourteen days. If the Bureau does not complete its investigations within 21 days, it should delete the disputed information as requested by the complainant. However, if the Bureau later completes these investigations, it may reinsert this information on its list, based on the results. In the case of reinsertion, the customer ought to be informed of the action taken.
If this procedure proves ineffective, you could seek redress in court. Before that, though, be sure to have exhausted the above process, failure to which you may suffer loss of your case. Let’s survive these economic times without more trouble, shall we?
By Victory Wanjohi and Praxedes Kageha