Tanzania See First Predictive Consumer Credit Score

Dun & Bradstreet Credit Bureau Tanzanian launched in late October 2019, the country’s first real predictive consumer credit score.

The predictive score which is expected to be used by lenders and creditors of all categories and across various sectors to assess the creditworthiness of their customers with particular emphasis on measuring the Probability of Default (PD) of borrowers, is expected to offer numerous benefits to the financial sector.

The launch which took place in the commercial capital Dar Es Salaam saw the attendance of the Director of Banking Supervision of the Bank of Tanzania (BOT), lenders of all categories including commercial banks, microfinance institutions, and leasing companies.

Also present were representatives of various stakeholders institutions such as the Tanzania Bankers Association, the Tanzania Institute of Bankers, and the Institute of Finance and Management.

During the event, the CEO of Dun & Bradstreet Credit Bureaus, Mr. Miguel Llenas said, “the introduction of our consumer score further expresses our long-term commitment to the Tanzanian market and to the financial inclusion agenda of the Bank of Tanzania with emphasis on easier access to credit products at reasonable interest rates. Our score is an empowering tool which lenders, borrowers and in fact, the regulator need to take full advantage of in promoting sound and generally beneficial credit practices.”

Speaking on the benefits of the score, the General Manager of D&B Credit Bureau (Ghana & Tanzania), Mr. Adebowale Atobatele said, “Now, we expect to see amongst other things, shorter turn-around-time on loan or credit applications and approvals, elimination of subjective lending, a good match between borrower’s risks profiles and interest rates, easier identification of potentially delinquent customers or accounts leading to a reduction in non-performing loans (NPLs), the introduction of new credit products such as real credit cards and perhaps most important, that credit products offered to borrowers match their risk profile and capacity to repay.”

He further said that the company was committed to working closely with the regulator, commercial and microlenders, insurance companies, economic development boards & other stakeholders in all markets where they operate in order to build a robust credit information infrastructure for the benefits of all and sundry.

On his part, the CTO of D&B Credit Bureaus Limited, Mr. Kelyn Pena, who spoke on the mechanics of D&B’s predictive score, said, “the score has been developed using a modelling technique that takes into consideration all intelligence that can be drawn from the credit data available in the Tanzanian market. So in essence, it is modelled to fit the context. The score is purely statistical and therefore, is an objective predictor of a borrower’s future credit behavior and this is what gives credence to its predictive nature.”

About Credit Score

A credit score is a numeric valuation that lenders use, along with your credit report, to evaluate the risk of offering you a loan or providing credit to you. Credit scores are important metrics of creditworthiness that can determine whether you get a loan, what interest rates you pay on debts, and more.

Lenders use credit scoring, among other data points, to decide on whether to extend or deny credit. A person’s credit score is generally a three-digit number within a specific range. The higher the score, the lower is the probability for a person to default on the loan obligations in the coming 12 months.