Before granting loan to prospective clients, it is best to source for adequate report from credit information companies in other to verity eligibility of borrowers. This should be the normal trend in any developed or developing nation all in a bid to disallowing dishonest people having access to loans.
While most MFB are taking time and effort to verify the credit worthiness of their prospective client, some have total disregard for its usage and participation. Registering with at least two credit reference companies in Nigeria is a regulation which microfinance institutions are supposed to follow. This should be at the discretion of the MFB on which of the two to use. Most MFBs are registered with only one credit Reference Company and this have grave concequencies on the amount of information at their disposal to work with.
Presently we have three foremost credit reference companies in Nigeria licensed in 2008 and are operational till date;
- CRC Credit Bureau Limited,
- CR Services Credit Bureau Plc and
- XDS Credit Bureau Limited now First Central Credit Bureau.
When there is a limit cap to how many loan a client can access, it helps to keep borrowers in check without having to go above his spending limit. The information in the database of Credit Bureaus companies in Nigeria would be more useful if all the unsupervised informal sector have their data with the credit bureaus. Players in the unsupervised informal sector accounts for quit a large number of people causing problem for the regulated ones.
Another big issue faced by MFIs is the duplication of borrower which clients mostly find ways to manipulate. Most customers use different names and tittle just to get access to loans. This the credit bureau system has not been able to adequately address. While other process can nearly be cloned, the thumb verification process is still not yet deployed to tackle the problem of multiple identity. This form of credit verification for borrowers will go a long way in safe guarding depositors fund and continued existence of the MFI.
Informed lending is what credit bureau is all about, which is what Nigeria MFBs needs at present. This would help reduce the percentage of non-performing loans as high delinquency rate has a negative impact of the performance of lender institutions.
Serial defaulters will continue to exploit the absence of a functional credit referencing system and unless a comprehensive and informative database is in place, much might not achieve.
The article below will give adequate information about all you need to know about credit bureau in Nigeria https://www.proshareng.com/news/Credit%20Services%20&%20Registry/All-You-Need-To-Know-About-Credit-Bureaus-in-Nigeria-/38833
The major concern is the hearts of users of the three credit reference system in Nigeria is that? What are the chances of having more than three credit bureau system operating in Nigeria and what happens if we have more than three? Would credit user be obliged to register with more credit companies? Credit referencing in the Nigeria economy is relatively new. It will take quite some time to adequately get it right but what should be considered now is how to synchronize the activities of the three credit bureau into one, while they all still enjoy monotony of the information from their registered users.
This is realistic and can be achieve if all the three credit bureau decide to make it work.