1. 1. IMPORTANCE OF CREDIT SCORE WHILE APPLYING MICROLOANS TO L- PESA Let's have a brief introduction to Credit Rating and microloans before we discuss about its importance in financial industry. Whenever we lend money to someone, who might be well- known to us or almost a stranger, it's the trust that we build. According to this trust, we believe that the person whom we are lending money is going to pay back in time. On the other side, the person who gets the loan from the lender should pay back the money in time. Basically, the ability to take a loan of certain amount and pay it back in time is known as credibility of a person. Now, as far as the loan amount is concerned. There are people who have the credibility to take a loan of bigger amount and pay back. Also, there are those people who can avail a loan of small amount only to fulfill their basic necessities of life. They cannot even fulfill the basic documentation required to avail a loan or pay back the higher rate of interest applied on the loan amount. To solve this major issue and provide happiness to such people, microloans were introduced. Microloans are the small amount loans which are available with less documentation and lower or no interest rates to the needy people. There are many non profit organisations and companies which offer these microloans to the people in different countries around the world. L-Pesa is one of them. L-Pesa is a financial service company which currently provides microloans in African countries like Tanzania and Dar Es Salaam. One good thing about L-Pesa is that you can apply for microloans using mobile banking . All you need to do is register your mobile number on L-Pesa website and apply for the microloan. Initially, L-Pesa offers a microloan of $5 to its customers. Once the customer
2. 2. receives the loan and pay back in specified time, L-Pesa increases his credit score. Increased credit score allows the customer to avail another microloan of higher amount, i.e. $10. So, more is your credit score with L-Pesa, higher will be the loan amount. Presented By L-Pesa Micro Finance Micro Loan for Mobile Banking Customers