Is your lifestyle leading you into debt?

Find out the minor oversights that will get you blacklisted by financial institutions. PHOTO | FILE 

By Sandra Chao-Blasto

In Summary

• It starts from wanting to live like the Joneses and borrowing that Sh2,000 loan from Mshwari that you fail to repay on time.

Two months ago, Khevali Wafula walked into a branch of the Kenya Commercial Bank within the central business district in Nairobi seeking to borrow Sh20,000.

“I was running low on cash after paying school fees for my older children and I had paid part of the amount for the last born, so I wanted to clear it with the loan,” she told BDLife.

Ms Wafula was confident she would get an instant loan and deposit it in the school’s account on the same day.

“There are some financial obligations as a parent you want to get over with and the education of your children is one of them. I wanted the money after which I would go to the school’s bank, deposit it and walk out with a pay-in slip which I would then drop at the school,” she said.

But to her utter shock, the bank declined to give her the money, saying that she had been listed negatively by a credit reference bureau for failing to pay an outstanding loan.

“I was shocked because as far as I was concerned, there was no bank I owed money and I had cleared any loans I had taken,” she said.

Troubled by the news of being “blacklisted”, Ms Wafula began calling each of the banks she had borrowed money from in the last three years to find out where the problem was.

It was only a few weeks ago that she discovered the origin of the debt which had made her unworthy to receive credit from a financial institutions.

“I found out that the outstanding debt was from a loan I had taken two years earlier from one bank, which was a shock because a second bank had taken up the loan from the bank that had disbursed it in the first place. I had even settled the whole amount with this second bank,” she said.

On further investigation, Ms Wafula realised that when the loan was bought out by the second bank, it wasn’t fully settled.

“Apparently a few shillings remained unpaid when the second bank bought out the loan, which has continued accumulating interest over the years to about Sh4,000,” she said.

She cannot believe she has had to go through all this trouble through no fault of her own and for such a small amount. She told BDLife that she is still in the process of clearing the whole issue up with the credit reference bureau where her name was posted.

Serial debtors

Ms Wafula is not the only one who has found herself in this unenviable position. Kenyans with no idea about their credit ratings walk into financial institutions in search of loans to sort out various emergencies, including medical bills, school fees arrears and sometimes even accumulated rent.

These are individuals who prefer to borrow money to sort out their issues instead of keeping money aside for such eventualities.