Credit bureau searches soar 115% in 2024 as digital lending rises

Searches on the databases of Ghana’s licensed credit bureaus rose sharply by 114.60 in percent 2024, underscoring the growing role of credit reporting in the country’s lending landscape.

The Bank of Ghana’s Credit Reporting Activity Report 2024 revealed that total inquiries climbed from 13,745,137 in 2023 to 29,496,440 in 2024, driven largely by the expansion of digital lending.

According to the report, the searches were conducted by financial institutions and other authorized users of the Credit Reference System in line with Section 26 of the Credit Reporting Act, 2007 (Act 726), which mandates credit checks on prospective borrowers before approving or denying loan applications.

Beyond this statutory requirement, many institutions also performed searches for customer verification, portfolio monitoring, and other risk management purposes.

On a monthly basis, the report noted that an average of 2,458,037 inquiries were made in 2024.

This figure represents a 16.24 percent increase over the 2023 monthly average of 2,114,636, further reflecting the growing acceptance of credit reports and borrower history in credit decision-making processes.

Breakdown by Borrower Type

In 2024, 55 percent of all database searches targeted individual borrowers, while about 44 percent focused on customers applying for or servicing digital loans. The report observed that the high proportion of searches linked to individuals highlights the continued expansion of retail lending and the heavy reliance on credit histories to guide lending decisions in this segment.

Conversely, the number of searches conducted on corporate borrowers fell significantly from 472,579 in 2023 to just 105,953 in 2024. The Bank attributed this decline to multiple factors, including persistently high lending rates, the depreciation of the cedi, and high non-performing loan (NPL) ratios, which prompted more cautious and selective lending to the private sector.

This fall in corporate inquiries contrasts with data showing a 26.3 percent increase in nominal private sector credit at the end of 2024 compared with 10.7 percent growth in December 2023. The figures suggest that while credit to corporates increased in value, it was likely concentrated among a smaller number of large, well-established firms rather than broadly distributed across many businesses.

Banks Lead in Inquiries

The report further disclosed that banks conducted the highest number of searches on credit bureau databases in 2024, totaling 13,522,171 inquiries and accounting for 84.93 percent of all searches. This marks a significant rise from their 77.83 percent share in 2023, reinforcing the dominant role of universal banks in Ghana’s credit market.

Microfinance and microcredit institutions ranked second, responsible for 8.82 percent of total inquiries, down from 11.0 percent in 2023. Savings and loans companies, along with other financial service providers, also saw a decline in their share of searches over the same period.

Data Submission on the Rise

In addition to inquiries, data submission to credit bureaus also increased significantly in 2024. An average of 61,139,397 records were submitted each month, compared to 21,063,325 in 2023. The submissions included details on newly disbursed loans, updates on existing loans, and digital lending records.

The Bank of Ghana emphasized that the sharp growth in both inquiries and data submissions reflects the increasing integration of credit bureau services into the credit risk assessment frameworks of lenders. This, the central bank noted, is essential in identifying non-creditworthy borrowers, reducing default rates, and fostering a healthier credit environment.

Outlook

Industry analysts believe the continued adoption of credit bureau services could enhance transparency in Ghana’s financial sector, improve loan portfolio quality, and reduce systemic risk. However, the decline in corporate borrower searches could signal more cautious lending to businesses, particularly small and medium enterprises, unless macroeconomic stability improves.

The Bank of Ghana concluded that credit reporting remains a vital tool for prudent lending, especially as the financial sector adapts to evolving risks and opportunities in both retail and corporate credit markets.