If the COVID-19 pandemic has affected your finances or your job, you’re not alone. According to the World Bank’s ongoing survey on the socio-economic impact of COVID-19, Kenyan consumers are still struggling with the effects of high unemployment and reduced income, with many taking consumption loans and looking for additional ways to generate income.
“If you’re struggling to make ends meet, there are several debt relief options available to you,”
says Morris Maina, chief executive officer of TransUnion Kenya.
The one thing that you should not do is to resort to so-called ‘credit repair agents’, who claim to be able to remove credit listings and provide clearance certificates for an upfront fee.
“A quick fix to get your credit back on track may seem tempting, but it’s nothing more than a scam. This practice is illegal, and you could end up losing your money. If you’re battling to pay your bills, you should proactively talk to your lenders to make arrangements; use credit responsibly; and know your credit standing,”
To avoid late payments and adverse credit listings, here are TransUnion’s top five tips.
Talk to your banks and lenders early and often
If money is tight and you’re worried you’re going to miss a payment or two, it’s best to contact your lender before the payment is due to make alternative payment arrangements. You can explain your situation and ask whether they can offer any assistance. Don’t just ignore your bills.
Don’t just stop paying your bills
“The worst thing you can do in a financial crisis is to just stop paying your bills,” warns Maina. If you stop paying your bills without talking to your lenders, or making arrangements for a payment holiday, your credit score will be affected negatively.
Consider taking a payment holiday
A payment holiday is an agreement with your credit provider/s to temporarily stop making repayments on your loans for an agreed period. “It is important to remember that you still owe the amounts that you haven’t repaid during your payment holiday. These will have to be repaid. Your credit provider will be able to explain all the details and how this will work,” said Maina.
Keep protecting your credit health
Many Kenyan consumers are facing some tough financial choices right now. “We encourage you to pay what you can to avoid late payments on your credit report. If you can’t make minimum payments, talk with your lenders to find out if they’re offering any assistance. The important thing is to pay all of your bills on time if you can. For most people, paying on time is the biggest factor that affects your credit score,” said Maina.
Check your credit report
Checking your credit report is an important step on the road to financial health. You can download your credit report for free once per year from TransUnion and other credit bureaus. You can also request a credit report or access your Credit Reference Bureau (CRB) clearance certificate through TransUnion’s Nipashe, which allows consumers to easily access their credit information through SMS. Your first clearance certificate is free.