myCreditScore — A Step in the right direction but more work needed

The launch of myCreditScore, Ghana's latest credit bureau, is a welcome development in the country's financial landscape.

This innovative platform has the potential to transform credit referencing, providing individuals and businesses with easier access to financial opportunities.

However, as we acknowledge the benefits of myCreditScore, we cannot overlook the daunting challenge of rising Non-Performing Loans (NPLs), which threaten the stability of our financial sector.

The latest Monetary Policy Report reveals a disturbing 24.3 per cent NPL ratio, up from 20.0 per cent last year.

While the banking sector's overall performance has improved, elevated credit risk remains a primary concern. The high interest rate regime, with weighted average lending rates reaching 28.84 per cent, is unsustainable for businesses and households.

In this context, myCreditScore's potential to reduce NPLs and lower interest rates is crucial.

Vice-President Dr Mahamudu Bawumia's assertion that the credit score would promote a more resilient and inclusive financial system is well taken.

Nevertheless, we caution that the success of myCreditScore depends on addressing the underlying factors contributing to high NPLs and interest rates. The government must play a critical role in streamlining the tax regime, reducing utility costs and easing the overall business environment.

Until these structural issues are tackled, the benefits of myCreditScore may be undermined. We urge policymakers to work in tandem with the private sector to create an enabling environment for businesses to thrive.

Dr Bawumia will agree with us at the Daily Graphic that myCreditScore, standing in isolation, cannot achieve its intended goal. It is an ambitious start towards a certain level of success in our financial space but let us not be consumed by the promise it brings and taint its potential with fanfare, but rather focus on all the underlying issues that could hinder its success.

To fully leverage myCreditScore's potential, the government must address policy and regulatory bottlenecks hindering business growth. The private sector should utilise myCreditScore to inform lending decisions and promote credit discipline.

Financial institutions must adopt risk-based pricing, reflecting borrowers' creditworthiness. Regulatory bodies should enhance oversight and enforcement to prevent predatory lending practices.

The successful implementation of myCreditScore will also depend on the ability of financial institutions to adapt to the new credit scoring system. This may require significant investments in technology and training but the long-term benefits will be worth the effort.

By leveraging data-driven insights, lenders can make more informed decisions, reduce risk,and offer tailored financial products that meet the needs of their customers.

Another critical factor in the success of myCreditScore is public awareness and education. Many Ghanaians may not fully understand the implications of credit scoring or how to maintain a healthy credit profile.

Therefore, it is essential for the authorities to launch public awareness campaigns to educate citizens on the benefits and responsibilities associated with credit usage.

Furthermore, myCreditScore presents an opportunity for our country to align with international best practice in credit reporting. This can enhance the country's attractiveness to foreign investors and facilitate greater economic integration with other regions.

As Ghana continues to deepen its engagement with the global economy, a robust credit reporting system will be essential for building trust and confidence among international stakeholders.

To ensure the integrity of the credit scoring system, it is crucial to maintain the highest standards of data protection and security.

The sensitive financial information handled by myCreditScore must be safeguarded against unauthorised access, theft or manipulation. The authorities must prioritise data security and implement robust measures to prevent potential breaches.

Ultimately, the success of myCreditScore will be measured by its impact on financial inclusion and economic growth. By expanding access to credit and reducing borrowing costs, this innovative platform can unlock new opportunities for entrepreneurs, small businesses and low-income households.

As the nation strives to build a more resilient and inclusive economy, myCreditScore has the potential to be a game-changer but we  must address the underlying structural challenges that have held us back for so long.

By harnessing the power of myCreditScore and addressing systemic challenges, we can foster a more vibrant financial ecosystem, characterised by lower interest rates, reduced NPLs and increased access to credit for deserving individuals and businesses.

The Daily Graphic commends the innovators behind myCreditScore and encourages stakeholders to collaborate towards a more resilient and inclusive financial system. Ghana deserves better, and with collective effort we can achieve a brighter economy in future.