Credit Myths Debunked: Separating Fact from Fiction in Kenya

Credit myths cost Kenyans money. Here's the truth about common credit misconceptions.

Myth 1: Checking My Own Credit Score Hurts It

❌ The Myth

"If I check my CRB report, it will lower my credit score."

✅ The Truth

Checking your own credit report does not affect your score at all.

Why the confusion?

Soft inquiries (your own checks) = no score impact
Hard inquiries (lender checks) = minor temporary impact (-5 to -10 points)
Most people confuse the two

What this means for you

Check your CRB report as often as you want
Your annual free check doesn't hurt you
Monthly checking won't hurt you
Only lender inquiries have impact

Action you should take

✅ Check your CRB score monthly to monitor progress

✅ Get your free annual report

✅ Watch for errors that hurt you

✅ Don't be afraid to know your own credit

Myth 2: Closing Old Credit Accounts Improves Credit

❌ The Myth

"I'll close old credit cards and accounts to clean up my credit."

✅ The Truth

Closing old accounts lowers your credit score, not raises it.

Why this happens

Closing reduces your average credit age
Less history means lower score
Reduces total available credit
Makes you look more desperate for credit

The damage

Closing one old account: -20 to -50 points
Closing multiple accounts: -50 to -150 points
Damage can take years to recover

What actually works

✅ Keep old accounts open (even if unused)

✅ Use them occasionally (KES 1,000 annual purchase)

✅ Pay the balance if you use them

✅ Build longer credit history over time

Action you should take

Leave old credit cards open
Don't use them if not needed, but don't close them
Keep loan accounts open after paying off (if possible)
Value of old history grows over time

Myth 3: Having Multiple Credit Cards Is Bad

❌ The Myth

"If I have more than one credit card, my score will drop."

✅ The Truth

Multiple credit cards with low balances improves your score.

Why this helps

Shows ability to manage different credit types
Lowers utilization across cards (not on one card)
Demonstrates diverse credit experience
Shows lenders you're trusted elsewhere

Example impact

One card:

Balance: KES 60,000
Limit: KES 100,000
Utilization: 60% (bad)
Score impact: -20 points

Same balance on two cards:

Card 1: KES 30,000 of KES 100,000 (30%)
Card 2: KES 30,000 of KES 100,000 (30%)
Utilization: 30% (good)
Score impact: +20 points

When multiple cards are bad

Only if you:

Spend more because you have more cards available
Get new cards you don't need
Apply for many cards at once
Carry high balances on all of them

Action you should take

✅ If you have multiple cards, use strategically

✅ Spread spending to keep utilization low

✅ Don't apply for cards just for numbers

✅ Use only if it helps your score (reduces utilization)

Myth 4: You Can't Get Credit with No Credit History

❌ The Myth

"I've never borrowed before, so I can't get a loan."

✅ The Truth

You can build credit from zero using multiple methods.

How to start building credit

Get credit card - Build revolving credit history
Take small loan - Build installment credit history
Use BNPL services - Flexible credit building
Become authorized user - Piggyback on good credit

Building timeline

Month 1-3: Establish first credit
Month 3-6: Multiple accounts active
Month 6-12: Score reaches 550-600 (fair)
Month 12-24: Score improves to 650+ (good)

Best strategy for new borrowers

Get credit card (even small limit)
Use monthly, pay balance fully
After 3 months, apply for small loan
Continue building mixed credit

Action you should take

✅ Start building credit today if you haven't

✅ Don't wait to borrow; waiting hurts you

✅ Responsible early borrowing helps

✅ Build positive history from day one

Myth 5: Paying Cash Builds Credit

❌ The Myth

"If I pay cash for everything, my credit will be great."

✅ The Truth

Paying cash builds no credit history at all.

Why this matters

CRB only sees credit transactions
Cash purchases don't report to CRB
No credit history = low/no score
Can't get loans when you need them

The paradox

People with perfect payment histories (cash) = no credit score
Score: 0 or 300 (very poor)
Can't get loans despite never defaulting
Financial system requires credit history

What actually happens

Cash buyer:

Buys car with cash (no credit history)
Builds house with savings (no credit history)
Emergency happens, needs loan
No credit history = loan rejection or very high rate

Credit-using borrower:

Uses credit card monthly
Pays off balance every month
Takes small loan, repays on-time
Gets approved for larger loans later

Action you should take

✅ Use credit for necessary purchases

✅ Pay off balance monthly (builds credit, no interest cost)

✅ Don't hide from credit system

✅ Strategic credit use helps, not hurts

Myth 6: My Income Determines My Credit Score

❌ The Myth

"High income = high credit score automatically."

✅ The Truth

Credit score is based on credit behavior, not income.

What CRB actually sees

Payment history (on-time vs. late)
Credit utilization (how much you owe)
Credit age (how long you've used credit)
Credit mix (types of credit)
Recent inquiries (new applications)

CRB DOES NOT see:

Your income
Your job title
Your savings
Your property
Your education

Real-world example

Person A: KES 500,000 salary, 50% utilization, one late payment = Score 580
Person B: KES 100,000 salary, 10% utilization, perfect payment history = Score 750

Person B has 5x lower income but much better credit.

Why this matters

High income doesn't excuse late payments
Low income doesn't prevent good credit
Lenders care how you manage credit, not how much you earn

Action you should take

✅ Focus on credit behavior, not income

✅ Manage available credit well

✅ Pay every bill on time (more important than earning more)

✅ Control spending relative to limits

Myth 7: Bad Credit Is Permanent

❌ The Myth

"Once my credit is bad, I'm ruined forever."

✅ The Truth

Bad credit is temporary and improvable.

Timeline for recovery

Late payments: Recover in 12-36 months with perfect payment history
Defaults: Recover in 2-5 years with commitment to rebuild
Blacklisting: Can be disputed immediately; clear in 7 years at worst

Real example

Year 1: Default on KES 200,000 loan, blacklisted, score 350
Year 2: 12 months on-time payments, score improves to 450
Year 3: 24 months on-time, strong positive history, score 580
Year 4: 36 months perfect, score 680, approved for bank loan
Year 5: Back to 700+, access to best rates

Why people think it's permanent

They don't know recovery timeline
They give up after 6 months
They read outdated information
They don't maintain discipline

Action you should take

✅ If your credit is bad, start recovery today

✅ Expect 2-3 years of focused effort

✅ Consistency matters more than single perfect month

✅ Bad credit is fixable with discipline

Myth 8: Using Credit Cards Is Always Bad

❌ The Myth

"Credit cards are evil and will ruin you."

✅ The Truth

Responsible credit card use is one of best credit-building tools.

When credit cards help

Monthly spending, paid in full = 0% interest cost + credit score building
Emergencies = immediate cash available
Rewards/cashback = free money if you pay balance
Building credit history = lower rates on future loans

When credit cards hurt

Carrying balance = 15%+ interest fees
Overspending because available = debt spiral
Missing payments = credit damage
Multiple high balances = utilization damage

The responsible approach

Use for planned monthly expenses
Pay balance in full when bill comes
Keep utilization below 30%
Earn rewards/cashback = free benefit
Demonstrate credit responsibility

Example comparison

Person A: Avoids credit cards

No interest paid (saves money)
But builds no credit history
Score: 0-300 (can't get loans)

Person B: Uses card responsibly

Spends KES 10,000 monthly
Pays full balance monthly (0 interest paid)
Builds strong credit history
Score: 750+ (gets best loan rates)
Gets KES 1,000 cashback = wins money

Person B wins: Good credit score + rewards, pays no interest.

Action you should take

✅ Use credit card strategically

✅ Never carry balance (pay in full)

✅ Earn rewards/cashback

✅ Build credit while spending money you were going to spend anyway

Myth 9: CRB Reports Are Always Accurate

❌ The Myth

"If it's on my CRB report, it must be true."

✅ The Truth

CRB reports contain errors regularly.

Common errors

Accounts you didn't open
Payments marked late that were on-time
Balances showing higher than actual
Duplicate accounts
Wrong names/ID numbers

How errors happen

Lender data entry mistakes
System integration failures
Incorrect payment posting
Identity confusion
Fraud/stolen identity

Impact of errors

Can lower score 50-200+ points
Can result in loan rejection
Can cause blacklisting unjustly

What you must do

Check report at least annually (free)
Look for errors specifically
Dispute any inaccuracies immediately
Disputes are free through CRB

Action you should take

✅ Check your CRB report annually (crb.co.ke)

✅ Review completely for errors

✅ Dispute errors immediately if found

✅ Keep documentation of disputes

✅ Don't assume report is correct

Myth 10: Interest Rates Are the Same at All Banks

❌ The Myth

"All banks charge the same interest rate."

✅ The Truth

Interest rates vary significantly between lenders (5-10+ percent difference).

Real example: KES 100,000 loan for 12 months

Bank

Rate

Total Cost

Monthly Payment

Bank A	12%	KES 112,000	KES 9,333
Bank B	15%	KES 115,000	KES 9,583
Digital C	24%	KES 124,000	KES 10,333

Difference: KES 12,000 between best and worst

Why rates differ

Your credit score
Collateral offered
Loan amount
Bank's appetite for risk
Your relationship with bank

Action you should take

✅ Compare rates from 3-4 lenders minimum

✅ Even 1-2% difference = thousands saved

✅ Better credit score = better rates

✅ Shopping around pays off

Myth 11: Loans Always Make You Poorer

❌ The Myth

"Debt is always bad; you should avoid all loans."

✅ The Truth

Loans can be investments that make you richer.

Good loans vs. bad loans

Good loans (investment):

Car loan (vehicle has value, enables income earning)
Mortgage (home appreciates, you own property)
Business loan (generates more income)
Education loan (increases earning potential)
Asset loan (equipment produces revenue)

Bad loans (consumption):

Vacation loan (no value remains)
Luxury item loan (depreciates immediately)
High-interest spiral (paying interest, not building)

Real example

Borrow KES 200,000 at 15% to start business
Business generates KES 50,000/month profit
Pay back loan in 6 months
Net result: KES 100,000 richer (6 months profit - interest cost)

Action you should take

✅ Borrow strategically for investments

✅ Avoid borrowing for consumption

✅ Calculate return vs. interest cost

✅ Use loans to build wealth, not destroy it

Myth 12: One Missed Payment Ruins Everything

❌ The Myth

"If I miss one payment, my credit is destroyed permanently."

✅ The Truth

One missed payment hurts, but is recoverable.

Impact of one late payment

Score drops 30-50 points (significant but not fatal)
Shows on report for 5-7 years
Recovery starts immediately with on-time payments
Each subsequent on-time payment helps

Recovery from one late payment

Month 1 (late): Score drops 40 points
Month 2 (on-time): Score recovers 10 points
Month 3-6 (on-time): Recovers 5-10 points/month
Month 12: Back to near normal
Month 24: Impact largely forgotten

What matters after the late payment

All subsequent payments on-time (critical)
No other late payments
Build positive history going forward
Lenders care about recent behavior

Action you should take

✅ Don't panic if one late payment happens

✅ Make next payment immediately

✅ Recover by consistent on-time payments

✅ Life goes on; build better history

Key Takeaways

✅ DO:

Check your credit regularly (no impact)
Keep old accounts open (helps score)
Use credit strategically
Compare lender rates
Build credit from zero if needed
Recover from bad credit
Dispute errors immediately

❌ DON'T:

Close old accounts (hurts score)
Pay cash for everything (no credit)
Fear credit cards (use responsibly)
Trust CRB without verification
Assume one mistake ruins you
Believe guaranteed removal promises
Ignore your credit

Next Steps

FAQ

Are all the myths true for Kenya?

These myths are near-universal. Kenya's CRB system follows standard credit bureau logic, so yes, all apply in Kenya.

Which myth costs people the most?

Myth 1 (checking own score hurts) and Myth 5 (paying cash builds credit). People avoid credit entirely based on these false beliefs.

Can I fix mistakes about my credit?

Yes. If you've made credit decisions based on myths, you can recover. Start taking positive credit actions today.

How do I know what's true about credit?

Ask your bank directly, check CRB's official website, or read from CRB Kenya's educational materials.

Are there other credit myths I should know?

Yes, but these 12 are most common and costly. Once you understand these, others are easier to spot.