TransUnion Kenya has joined forces with FICO to enhance credit accessibility in Kenya through advanced risk assessment solutions. This partnership introduces cutting-edge credit scoring models designed to foster financial inclusion and empower lenders with more accurate decision-making tools.
At the heart of this initiative are two key innovations: TransUnion’s CreditVision® Variables and the FICO® Score. CreditVision Variables offers an in-depth analysis of consumer financial behavior by utilizing over 145 data sources and tracking up to 24 months of payment history. The FICO Score, developed using predictive analytics and data from over 4 million records in TransUnion’s database, refines traditional credit risk assessment approaches.
These solutions are set to revolutionize Kenya’s lending ecosystem by providing a more granular and effective means of assessing credit risk. Lenders globally have reported a 20%-30% improvement in risk predictability and a 15%-20% increase in approval rates using CreditVision Variables. The deployment of these tools in Kenya is expected to significantly enhance lenders’ ability to extend credit to a wider consumer base while improving risk management strategies.
Morris Maina, CEO of TransUnion Kenya, emphasized the transformative impact of these solutions: “Consumers, Small, Micro, and Medium-sized Enterprises (SMMEs), and other businesses stand to gain significantly from increased credit access, ultimately improving their financial health and achieving their goals. At the same time, lenders will benefit from better risk management and decision-making tools, fostering greater financial inclusion and economic empowerment.”
The FICO Score is particularly relevant in Kenya’s lending landscape, where microlending plays a critical role. With 95% of scoreable consumers having at least one microlending tradeline, the introduction of this new scoring model will provide lenders with a more precise assessment tool. The FICO Score, ranging from 300 to 850, offers a clear measure of a consumer’s credit risk, with higher scores indicating lower risk. This transparency allows lenders to make informed credit decisions while also educating consumers about their financial standing.
Financial inclusion in Kenya is on the rise, as evidenced by TransUnion’s Q2 2024 Consumer Pulse Study. The report highlights that 36% of consumers felt they had sufficient access to credit, a notable improvement from 33% the previous year. With 60% of consumers planning to apply for new credit or refinance existing loans within the next year, these innovations arrive at a crucial time.
John Gachora, Chairman of the Kenya Bankers Association, expressed optimism about the adoption of these solutions, stating, “By embracing new technologies, we can ensure broader access to financial services, supporting sustainable development and prosperity for all.”
