November 2017

Planning: (also called forethought) is the process of thinking about and organizing the activities required to achieve a desired goal. It involves the creation and maintenance of a plan, such as psychological aspects that require conceptual skills. There are even a couple of tests to measure someone’s capability of planning well. As such, planning is a fundamental property of intelligent behavior. As we draw to the close of the year, many units must start planning for the following year. Government in the month of November will unveil its budget, which will have an impact on industry and trade. In agriculture farmers are planning on the agricultural season before them. SMEs will be and corporates will be planning on ways to mitigate forex shortages.

June 2015

Skiptrace or Skip trace: The term skip trace refers to the process of locating a person's whereabouts for any number of purposes, but usually debtor recovery. The "skip" refers to the person being searched for, and is derived from the idiomatic expression "to skip town", meaning to depart (perhaps in a rush), leaving minimal clues behind to "trace" the "skip" to a new location. Skip tracing tactics may be employed by credit providers, debt collectors, repossession agents, attorneys, etc., attempting to locate a subject whose contact information is either not up-to-date or likely to have changed due to a "skip" to a new location. A credit reference bureau (CRB) is often used as a vital source of information in the skip trace process. FCB, Zimbabwe's leading CRB, has some information on over 2.3 million individuals and more than 145,000 companies, constantly being updated by over 50 subscribing credit provider institutions. The FCB Skip Trace reports, giving subscribers' visibility over the subject's last five contact details captured in the database, is an invaluable tool in the skip trace process.

May 2015

Annual Percentage Rate (APR): The term annual percentage rate (APR),corresponding sometimes to a nominal APR and sometimes to an effective APR (or EAPR), describes the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, etc. The terms have formal, legal definitions in some countries or legal jurisdictions, but in general; the nominal APR is the simple-interest rate (for a year), while the effective APR is the fee + compound interest rate (calculated across a year). In many countries and jurisdictions, lenders (such as banks) are required to disclose the "cost" of borrowing in some standardized way, such as APR, as a form of consumer protection. Together with understanding creditworthiness, credit scores, credit risk and risk-based pricing, consumers can improve their economic empowerment by understanding APR and its usefulness in comparing the options available to them when borrowing.

April 2015

Risk-based Pricing: This is a methodology generally accepted and used by many credit providers world-wide. However, in Zimbabwe, it is still to be widely adopted. Elsewhere, it has been used for many years as lenders measure and off-set credit risk using interest rates and other related fees. In a risk-based pricing scenario, the interest rate on a loan is determined not only by the cost of funds but also by the lender's estimate of the probability that the borrower will default on the loan. A borrower who the lender thinks is less likely to default will be offered a better (lower) interest rate. The lender may consider a variety of factors in assessing the probability of default, such as; the borrower's credit score, or employment status. FCB is Zimbabwe's leading Credit Reference Bureau (CRB). In 2014, FCB processed more than 1.5 million status checks on Zimbabweans from both domestic and International clients. FCB data and scores may be used to assist in building a risk-based pricing framework for credit providers in Zimbabwe.

March 2015

Responsible Finance: According to CGAP, in a financial world characterized by responsible finance, clients' benefits are balanced carefully with providers' long-term viability, and client protection is built into the design and business at every level. Products are thoughtfully designed, offer reasonable value-for-money, and minimize potential harm, such as over-indebtedness. Delivery practices are respectful, and do not rely on aggressive sales, coercive collections, or other inappropriate behaviour. Clients receive clear, comprehensible information so they can make informed and careful choices about financial products and providers. When problems or misunderstandings arise, customers have accessible and effective mechanisms for resolving them. FCB is Zimbabwe's leading Credit Reference Bureau (CRB). In 2014, FCB processed more than 1.5 million status checks on Zimbabweans from both domestic and International clients. FCB supports the application of Responsible Finance principles.

February 2015

Credit Risk: This refers to the risk that a borrower will default on any type of debt by failing to make the required payments. The risk includes; lost principal and interest, disruption to cash flows, and increased collection costs. Prior to the advances in technology and communications that now make credit information sharing efficient and cost effective, through mechanisms such as Credit Reference Bureaus (CRBs), lenders relied on collateral as security and risk assessment was based primarily on capacity to pay. However, particularly in consumer lending, it has been shown that such practices have severe limitations in managing credit risk. Capacity to pay, alone, is a relatively poor predictor of credit risk and collateral is a very inefficient form of security. Understanding the willingness to pay is a much better predictor of credit risk and insurance is a far more convenient form of security

January 2015

Economic Empowerment: This is the capacity to bring about economic change for oneself. In Zimbabwe, the guiding vision of the Zim Asset plan is "towards an empowered society and a growing economy." In previous months, we have explained the terms; "Creditworthiness", "Credit Reference Bureau (CRB)" and "Credit Score". These are all vital elements to giving a population the capacity to bring about economic change for itself, i.e. Economic Empowerment. Establishing a good track record of capacity and willingness to pay and repay commitments to others is the biggest asset any individual or small business can have and leverage to grow economically. FCB is Zimbabwe's leading CRB and in 2014 processed more than 1.5 million status checks on Zimbabweans from both domestic and International clients. Make 2015 the year that YOU take control of YOUR greatest asset - YOUR financial identity.

December 2014

Know Your Client (KYC): This is the process used by a business to verify the identity of their clients. The term is also used to refer to the bank regulation which governs these activities. Banks, insurers and export credit agencies are increasingly demanding that customers provide detailed anti-corruption due diligence information, to verify their probity and integrity. In order to comply with The Reserve Bank of Zimbabwe (RBZ) guidelines on Anti-Money Laundering and Combating the Prevention of Terrorism for Financial Institutions and Non-Financial Businesses & Professions, banks and cash dealers should cross-check the information provided by the counterparty with data held by public databases, such as The Financial Clearing Bureau (FCB), as part of their KYC processes. FCB is Zimbabwe's leading credit reference bureau (CRB) and has processed more than 1.5 million searches on Zimbabweans from both domestic and International clients so far in 2014.

November 2014

Credit Score: An analytically derived numeric expression of a person's creditworthiness that is used by lenders to access the likelihood that a consumer will repay their debts. A credit score is based on, among other things, past credit history. It is typically expressed as a number between 300 and 850 - the higher the number, the more creditworthy the consumer is deemed to be. Consumers can maintain a good credit score by demonstrating a long history of always paying on time and not having too much debt. The Financial Clearing Bureau (FCB), Zimbabwe's leading credit reference bureau (CRB), provides credit scores in its reports to subscribing institutions and consumers. FCB has, as a result, established positive financial identities for more than 1.3 million Zimbabweans so far in 2014.

October 2014

Credit Reference Bureau (CRB): Typically, a privately owned establishment that collects and compiles data regarding the; solvency, character, responsibility, and reputation, of a particular individual or business in order to furnish such information to subscribers, in the form of a report, allowing them to evaluate the financial stability of the subject. CRBs complement the role played by banks and other financial institutions in extending financial services within an economy. CRBs help lenders make faster and more accurate credit-related decisions. CRBs allow good borrowers to take their credit history effectively from one financial institution to another, thereby making lending markets more competitive and, in the end, more affordable. CRBs assist in making credit accessible to more people, and enabling lenders and businesses to reduce risk and fraud. Credit information sharing, therefore, has a positive economic impact. The Financial Clearing Bureau (FCB), Zimbabwe's leading CRB, provides credit scores in its reports to subscribing institutions and has established positive financial identities for more than 1.3 million Zimbabweans so far in 2014.

September 2014

Creditworthiness: The ability to borrow money. The better one's creditworthiness, the more likely it is that a bank or other financial institution will extend credit. Creditworthiness is established by repaying loans and other bills on time, spending prudently, and generally demonstrating financially responsible behaviour. Individual creditworthiness is typically measured by a credit score while a company's or other organization's creditworthiness usually is measured by its credit rating. The Financial Clearing Bureau (FCB), Zimbabwe's leading credit reference bureau (CRB), provides credit scores in its reports to subscribing institutions and has established positive financial identities for more than 1.3 million Zimbabweans so far in 2014.